TechCrunch has a great article up titled A longtime VC on the virtues of not swinging for the fences where the author interviews Jodi Sherman Jahic. Jodi’s fund, Aligned VC, focuses on capital efficient B2B startups where the entrepreneurs aren’t trying to build the next unicorn. From the post:
The majority of the time — something like 75 percent of the time, according to [the benchmarking company] Sand Hill Econometrics — founders who take venture money get not a dime.
Think about that for a minute: with all the focus and hype around raising venture money, the majority of founders that go that route don’t make any money at all. Of course, entrepreneurs choose to raise institutional capital for a variety of reasons, primarily to grow faster and build a large, valuable business. Only, the majority of entrepreneurs that go down this path don’t make a dime when the company sells.
The next time an entrepreneur says they want to raise venture capital, let them know that the majority of entrepreneurs that do so don’t make any money.
What else? What are some more thoughts on the idea that most entrepreneurs that raise venture capital don’t make any money?
David Cummings on Startups 