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Ankush Sharma
Business Consultant ...ย โขย 1m
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 doesnโt 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 doesnโt work at < $500M exit E.g. (A) Bootstrapped founder $1M โ $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 โ $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 founderโs 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 โbuild somethingโ 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 โ he/she would have changed how an industry works by the time his/her startups is making $100M annually. They would โLEAVE FOOTPRINTS ON THE SANDS OF TIMEโ ๐ ๐๐ด๐ข๐ญ๐ฎ ๐ฐ๐ง ๐๐ช๐ง๐ฆ ๐ฃ๐บ ๐.๐. ๐๐ฐ๐ฏ๐จ๐ง๐ฆ๐ญ๐ญ๐ฐ๐ธ
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