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Ankush Sharma
Business Consultant ... • 4h
Founders who raise VC money do not become rich. VC money is a swift death march for most founders, and most should stick to bootstrapping. The traditional venture model doesn’t fit most businesses: 1. Most expensive form of money available (expecting ~30-50% IRR) 2. VCs need ~50-100x outcomes to make their portfolios work. 3. And it means working ~100 hrs week for founders 4. Building wealth (as a founder) also doesn’t work at < $500M exit E.g. (A) Bootstrapped founder $1M → $5M business in 10 years and then exit for a 5x multiple at $25Mn Founder(s) has 80-90% = makes $20-23M personal wealth (B) VC funded founder $1M → $100M business in 10 years and then exit for a 5x multiple at $500M Founder(s) has 4-5% at exit (in most cases) = makes $20-25M personal wealth (A) Bootstrapped founder has a relatively relaxed life, works 50hrs a weeks or 9-10 hrs / day mostly, enjoys weekends and vacations with family & friends (B) VC funded founder’s life revolves around the business, has long weeks ~100hrs works 6-7 days from 8am to 12am, struggles with any form of personal life. Ages significantly earlier, misses important family occasions etc. (A) or (B) financial outcome remains almost same in both cases ~$20-25M Given this what traits do founders best suited to raise VC money have: - They have burning passion to “build something” that will shape the world - Money is not their motivator; - They know they cannot become wealthy raising VC money ONLY +ve for the VC funded founder → he/she would have changed how an industry works by the time his/her startups is making $100M annually. They would “LEAVE FOOTPRINTS ON THE SANDS OF TIME” 𝘈 𝘗𝘴𝘢𝘭𝘮 𝘰𝘧 𝘓𝘪𝘧𝘦 𝘣𝘺 𝘏.𝘞. 𝘓𝘰𝘯𝘨𝘧𝘦𝘭𝘭𝘰𝘸
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