From Pieter Welten – Prime Ventures (@pieterwelten)
Since it is my birthday I am like lets share some thoughts and observations with you:…
- Sometimes entrepreneurs tell me that they ‘don’t need’ venture capital as if it is something dirty. Fair enough, but then don’t try to convince me that you are building the next Google, Facebook, or Uber. All venture-backed companies.
- Investing €10 million in a start-up with 10 employees is like giving a child 100 lollies that he needs to finish in a week! He would have been happy with 20 as well and you keep 80 more lollies to make others happy.
- You need diversity in your management team, people w different backgrounds and skills. It is the same with football, you won’t win anything w 11 ‘Ronaldos’ in your team other than a lovely team sports calendar for millenials.
- Investing in a business at a very early stage and after a successful IPO saying that you knew this business was going to be great, is like saying that you were 100% convinced that Trump would become president and a Brexit would happen! We are no oracles, unfortunately..
- You need to have serious, high quality deal flow in order to pick winners. Imagine you have been in prison for 10 years. After your release every girl is probably ‘hot’. However you probably have a different opinion about this ladybird after a one-month touring trip with Victoria Secret models.
- Private equity has a completely different risk model and approach compared to venture capital. In PE you throw numbers in an LBO model and see if you get your desired return. With VC you throw numbers in Pandora’s box and you believe that the entrepreneur is the Supreme Being that will (re-) shape the world…
- Entrepreneurs always complain that there is not enough capital available. VCs complain that there are not enough fundable businesses out there. Lets either call it even OR agree that (i) VCs don’t get it and miss out on a lot of ‘soonicorns’ and (ii) there is too much capital in the market.
- From an investment perspective, a good venture capitalist is a ‘money multiplier’ – nothing more, nothing less.
- Sometimes the entrepreneur tells us venture capitalists that we fail to see the bigger picture. That we don’t understand their vision. Truth is, sometimes we don’t. BUT sometimes we do, because we have looked at thousands of businesses before. #respecteachothersvision
- The issue sometimes with company valuations is that the seller is not selling what the buyer wants to buy. I would never pay €10 for a croissant.
