Back to the Garage Basics
I don’t blame any founder for maximizing their returns. God bless them. But FB put in motion a very counter-intuitive chain of events. Why? How?
Follow the money. Traditionally, the BIG money guys, were comfortable making 20-50% on late stage deals about to go public. They had been printing money like that for a long time
Facebook knew they were immensely valuable way before their IPO. So, they held off, 1 2 3 years to build their business, their maturity, their revenue. They didn’t need the money because there were cheaters to the “old way”. Some of the big money guys went direct and said, waiting on the IPO? No prob, let us give you money anyway.
This began the slide from wall street money into startup land. The wall street guys have little street sense and way too much money. Voila, we now have $20mil seed rounds.
That simple. Unfortunately, too much money too early robs most startups of their mojo that allows them to find the right answer in the first place. Don’t get me wrong, it takes capital to build companies. But let’s invest big at the right stage. #venturecapital