[Judgmentality]

I had a company, and I was not particularly successful at raising money. I'm quite confident the main reason for this is because I was brutally honest about what was and was not possible, as investors offered me millions if I would just try X or Y. I would analyze their proposals, and come back and say "this will never make money and I can show it with incredible certainty." They then gave that money to someone else who offered to do that, and they failed because it was a terrible idea.

If I had raised more money, I would have wasted even more years before coming to the very painful reckoning that my startup was just untenable. I realize my tangent is unlikely related to your point and is separate from the article, but for a first time founder I am very glad I stuck to my integrity and only lost a few years of my life learning a valuable lesson instead of a decade.

In fact, I recently had an epiphany - if my startup succeeded and I'd become rich, I'd be a much shittier person today because of it. That failure fucking wrecked me but I needed it.

[adverbly]

It physically hurts me to think about how dead accurate this is.

You tell someone exactly why something won't work? Get rewarded with a door to the face. You save precious time because you care about actually building something of value. But you get no money.

Yes Man comes along. Takes the money. Fails spectacularly. Yes Man doesn't give two shits about improving anything and walks away rich(which is all they even wanted).

So hilariously ridiculous, but this kind of thing happens. All. The. Time.

[cjblomqvist]

Being right in the middle of that I have to say I'm surprised by a lot of the investors we've talked to and how they seem to want to fit everything into easy, simple and existing templates. Basically, risk aversion. The big downside of that is that that means non-innovative (not novel/new). Non-innovative projects usually doesn't work out - after all, they're not innovative.

So, in other words, investors are looking for non-innovative projects (due to their blind risk-aversion). Why would you do that? If you are looking for low risk, index funds are available. There are lots of options if you want to spread your risks. I guess the simple answer is most I've talked to simply aren't that smart (as investors anyway)... :/

[akiselev]

> So, in other words, investors are looking for non-innovative projects (due to their blind risk-aversion). Why would you do that? If you are looking for low risk, index funds are available. There are lots of options if you want to spread your risks. I guess the simple answer is most I've talked to simply aren't that smart (as investors anyway)... :/

Software VCs are so risk averse because startups have to find product market fit, which is already risky without throwing a bunch of tech risk on top of it.

That PMF bit is crucial: biotech VCs' don't follow that same pattern because they have relatively precise methods to identify product market fit, before the drug is even approved for sale. They have much more precise data on how many potential potential customers each drug could possibly have from public health data, how much they can afford from previous agreement and contracts with insurers combined with quality of life improvement estimates for the drug candidate, and a minimum of a 5 year monopoly which is usually closer to 14 years. Thanks to those factors, biotech companies have a damn-near-guaranteed exit strategy by phase 3 trials in the form of an acquisition or zero revenue IPO and the VCs can take much bigger risks.

[manquer]

Well , keep in mind that making money with real revenue , making money of an strategic sale and Improving / solving a real problem are all not always aligned. It is fairly common to achieve one or two of the three and still fail or succeed.

VC funds needs to make money, that only comes of an exit , if you can have real revenue before getting an exit it is great , if you are solving a real problem even better, but those two are not going to help VC meet their goals directly .

You as founder are spending 5-10 years on one thing , for the VC your startup is one among the dozen he is getting on, their tolerance of your failure is far higher than your own tolerance for your failure

[dustingetz]

What % of first time founders who are failed founders, end richer than they started?

[holoduke]

For a large part you cannot be certain of a lot of things in a startup. So being honest is not entirely relevant. What matters is your genuine belief in making it a succes and are able to bring that message to the vc.