Do VCs want to build companies, or create returns?

by Bradley Miller on August 26, 2009

{ 4 comments… read them below or add one }

WRM September 4, 2009 at 11:36 am

It’s all about the benjamins, baby.

admin September 4, 2009 at 5:48 pm

Agreed. But, let’s say you can develop a company that’s going to be a cash cow, but will require 10-12 years to fully develop. However VCs, because of the type of institutional money they take need 5-7 year turn around – therefore they’ll force you out prematurely to get their money out and you as a founder ultimately lose out. Both founders and VCs are about the benjamins, but from slightly different perspectives. Interesting problem for founders.

WRM September 8, 2009 at 12:19 pm

You just made the same statement as I did. It’s all about quick profits and managing risk of their money. All about the benjamins, baby.

Cash Cow or not in 10 years, they see the return in 5-7 and will not risk the additional amount of time in that orginization; or there is more money that can be made with another group rather than waiting for the the remaining 5-7. They will pull their money because they don’t care what happens after that initial 5-7 years. They have made their money and will move on to invest in other opportunities with the greatest return.

WRM September 8, 2009 at 12:30 pm

Anyone that borrows money or assets releases control to the proprietor of the capital that is at risk.

How the founder can leverage or counteract the ‘control’ is the challenge.

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