DISQUS

Tim's picture

Unregistered

Feeds

aliases

  • Tim
  • Tim
  • Tim Dierks

Tim

3 months ago

in Venture Fund Economics: Allocating Follow-On Capital on A VC
Why doesn't your model account for the fact that return on a later round at a higher valuation is going to be lower? It seems to me that if you can get an overall blended 5x return on 3 rounds of investment in a single company, then the first round probably returned 20x or higher.
2 replies
fredwilson's picture
fredwilson tim, you are right. the initial round in a winner is usually going to be 10x or higher
Jake I imagine that the model gets much more complex if you want to work in the step-up in valuation. While the B or C round is probably more expensive, Fred is also probably putting in 5 million instead of 1. The return multiple on the later rounds is likely to be much less than the earlier rounds but a realization event is probably closer meaning that despite the lower return multiple, the IRR will be strong.

7 months ago

in Paul Graham Tackles Two Issues In One Post on A VC
Possible alternate reasons:
* Founders turn down big deals when they see huge upside. Acquirers can't have enough info to value this inside perspective, so they're unable to offer big prices.
* Acquisitions are rarely to allow the company to continue to grow: they're usually to find so-called synergy in the combination. This always reduces the visible value contribution of the acquired company, making the situation self-fulfilling.
1 reply
Adam Wride's picture
Adam Wride It's also possible that founders turn down acquisition offers because they incorrectly value their company's potential (as in, too high). Turning down an offer only means that the founders really believe in their product. It doesn't mean their faith is well placed.

9 months ago

in comScore Blog Post On The Google Paid Clicks Issue on A VC
To me, this reads like Comscore covering their ass: when Google's revenue numbers come out, if they're down, then they were right: if they were up, well, now they're still right.

Everybody I know believes Comscore numbers are laughable, but they get attention because they're the only number that's public and the media doesn't know any better.

1 year ago

in No Good Deed Goes Unpunished on A VC
I fail to understand. They gave you a single code that was good for 25 people to sign up, so people could use it more than once? Who does invites that way? Why didn't they give you 25 codes, each one good exactly once?
Returning? Login