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He didn't imply that at all; if M&A execs also care more about pedigree, then pedigree is a great way to drive a VC exit, especially compared to building a busi

He didn't imply that at all; if M&A execs also care more about pedigree, then pedigree is a great way to drive a VC exit, especially compared to building a business that actually makes a profit.

pbiggar 13y ago
Acquihires dont move the needle for VCs.
- pppppowerbook 13y ago
  Depends on what you call an acquihire.
- 001sky 13y ago
  That's like saying F's don't impact your GPA. The reality is that returning capital does materially impact returns. The median VC is in an asset class whose returns are pretty poor.
  - pbiggar 13y ago
    I think you're saying that they move the needle down? That's not how it works: only the returned money counts, so if you return none, or only a little, the needle doesn't move up.
    - 001sky 13y ago
      Its called return <on investment>, so yes it matters. Absolute returns are fine, but force lager returns from winners to compensate for zeros when measured on an ROI basis. And all VC's are marketed on ROI, not absolute returns (for obvious reasons).
      - pbiggar 13y ago
        ROI is based on absolute returns. But more importantly, they gain actual dollar amounts from a sale. If they invest $3.5m from their $200m fund, and it returns $5m, they could care less. They're looking for the company that returns $50m or $350m. The post I was responding to was saying that VCs were motivated by acquihires ("a great way to drive a VC exit"). Debating the semantics of needles and ROIs is pointless. VCs are unmotivated by small gains and small businesses, and wont even invest in a company that can't promise to be valued above $100m one day.
        001sky 13y ago
        Your making silly assumpyions about VCs and how they operate, ones that you can't justify. An easy exit that returns 20-45% on a 1-2 year investment is a no-brainer if the only other option is going to zero in a time-wasting pain-in-the-ass situation. That is quite distinct from saying that this "ideal" investment sold to LPs. And its quite distinct from rational "binary bets". While VCs screen based upon threshold potential returns, the probability of being a 10x company <even after passing the screen> is order of magitude <10%. So, its silly to say that all vc exits are large exits. But since exits have more prestige than chapter 7s, disquising your failures as exits has <value>. If you can do this with non-dilutive financial returns, you a strategy that may be better than the alternative/s.

He didn't imply that at all; if M&A execs also care more about pedigree, then pedigree is a great way to drive a VC exit, especially compared to building a business that actually makes a profit.

pbiggar 13y ago

Acquihires dont move the needle for VCs.

pppppowerbook 13y ago
Depends on what you call an acquihire.
001sky 13y ago
That's like saying F's don't impact your GPA. The reality is that returning capital does materially impact returns. The median VC is in an asset class whose returns are pretty poor.
- pbiggar 13y ago
  I think you're saying that they move the needle down? That's not how it works: only the returned money counts, so if you return none, or only a little, the needle doesn't move up.
  - 001sky 13y ago
    Its called return <on investment>, so yes it matters. Absolute returns are fine, but force lager returns from winners to compensate for zeros when measured on an ROI basis. And all VC's are marketed on ROI, not absolute returns (for obvious reasons).
    - pbiggar 13y ago
      ROI is based on absolute returns. But more importantly, they gain actual dollar amounts from a sale. If they invest $3.5m from their $200m fund, and it returns $5m, they could care less. They're looking for the company that returns $50m or $350m. The post I was responding to was saying that VCs were motivated by acquihires ("a great way to drive a VC exit"). Debating the semantics of needles and ROIs is pointless. VCs are unmotivated by small gains and small businesses, and wont even invest in a company that can't promise to be valued above $100m one day.
      - 001sky 13y ago
        Your making silly assumpyions about VCs and how they operate, ones that you can't justify. An easy exit that returns 20-45% on a 1-2 year investment is a no-brainer if the only other option is going to zero in a time-wasting pain-in-the-ass situation. That is quite distinct from saying that this "ideal" investment sold to LPs. And its quite distinct from rational "binary bets". While VCs screen based upon threshold potential returns, the probability of being a 10x company <even after passing the screen> is order of magitude <10%. So, its silly to say that all vc exits are large exits. But since exits have more prestige than chapter 7s, disquising your failures as exits has <value>. If you can do this with non-dilutive financial returns, you a strategy that may be better than the alternative/s.