The wind don’t like startups tepid with no difference on the verge of bankruptcy
Abstract: venture capital is definitely a profit driven business, with about 4.5% of the capital investment and then get about $60% in profit. Venture capital model must be based on the following two expectations: first, most of the profits from the company returns more than 10 times the amount of investment; second, most of the investment will lose money.
editor’s note: the author of this paper, Jonathan Friedman is a partner in LionBird, is also active in Israel and Chicago digital health investors.
Each of the
venture capitalists were about to find those feelings that Founder to help them solve real problems in the real potential market. But in this case, why a large number of seemingly meet the requirements of the "good" company is not their favor?
venture capital is definitely a profit driven business, with about 4.5% of the funds invested and then get about $60% in profit. This is why the venture capital model must be based on the following two expectations: first, most of the profits from the company returns more than 10 times the amount of investment; second, most of the investment will lose money.
Most of these are also well aware of the founder
. But many people don’t know is that, despite the success of some entrepreneurial companies but tepid in the eyes of venture capitalists with nearly bankrupt no two.
so when you are in the financing of the people will often hear people to start up their own company limited space for investment. To understand this, we will be for you to resolve the venturecapitalist why not invest in your company.
venture capitalists six refuse
1 entry threshold low
in many industries, the first innovative companies are often followed by a group of imitators. If you once in the network effect, brand, patent technology or scale economic aspects could not save, followed by imitators or existing mature companies may occupy the market situation. And you, there is nothing.
or you will have a glimmer of hope that they will be able to buy your company in order to enter the market quickly. Well, sometimes it does happen, but venture capitalists are not interested in this kind of common acquisition and are not interested in the founders of such ambitions.
2 lack of competitive advantage
intensive market and low margin usually do not have any good way out. Venture capitalists believe that competition is a purely commercial grass root behavior, they are looking for companies with others can not imitate the competitive advantage.
3 unsustainable unit economic benefits
identify the right traction channels and adapt to the market / product is a start-up company in the early stages of the challenge to be faced. But the price / product complexity of this question