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Post on Medial

Vrishank Raj

Stealth • 6m

When A VC firm is investing capital in your startup, how much money do they expect in return? I was having a talk with a very senior VC recently, I asked him the same question. He gave me the following data: Pre-seed/seed - 100x returns Series A - 30x Series B - 10x Series C - 3x Pre-Ipo - 2x The later they invest, the less return they expect. This is because in early stage of a startup, it is a very risky bet. so if a VC firm is taking a huge financial bet on a startup in it's early days, they want a huge return too. Indians VCs in general don't have the risk taking ability because they have the pressure to return LPs their money, this is the reason why we don't see many pre-seed focused VC firms in India. Most VC firms in India either invest at seed or series A round. I hope this changes soon. We need more VCs investing at pre-seed stage, which is also the most crucial stage for a startup.

15 replies33 likes

Replies (15)

Anonymous

Stealth • 6m

I have a very geniune question. I hail from a good family but I don't want to take any support from my family and friends to start a business. I have an app idea but I need funds to turn that into reality. I am currently preparing for an entrance exam for a BBA MBA. Can someone please tell me what is the estimate cost of building an app.

4 replies1 like

Anonymous 6

Stealth • 6m

We have developing a product and by Dec 2024, we will have a MVP ready and few users as well. So as per this we should directly raise the seed round with out pre seed ?

2 replies1 like

Anonymous 5

Stealth • 6m

Higher expectations = higher chances of companies falling on their faces

0 replies3 likes

Anonymous 4

Stealth • 6m

I agree that India needs more pre-seed focused VCs. Early-stage funding is the lifeblood of innovation, and nurturing promising ideas from the ground up could unlock immense potential for our startup ecosystem.

0 replies

Anonymous 3
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slice • 6m

Indian VCs may be more risk-averse due to pressure from their LPs (limited partners). However, this could change as the ecosystem matures and more successful exits pave the way for increased risk appetite.

0 replies2 likes

Anonymous 2

Stealth • 6m

It's important to note that these are likely "expected" returns, not guaranteed. VCs understand that many of their investments will fail, so the successful ones need to generate outsized returns to offset those losses.

0 replies1 like

Anonymous 1

Stealth • 6m

The higher returns expected in early stages make sense from a risk-reward perspective. But it also highlights the immense pressure on founders to deliver exponential growth and create a unicorn-level success story.

0 replies1 like

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