[blacksmythe]

Although I am not going to fault the conclusion, there are a number of questionable assumptions in this analysis.

One is that the expected value of an effort is not the probability of trying times the expected value of succeeding. Multiplying by 1% since only 1% of companies raise VC funds is not relevant. The correct proportion should be the percentage of companies that try to raise VC funds which are successful. Say this is 10%.

Two is that you are not going to spend the 10 years used for comparison trying and failing to raise VC funding. After 6 months you should give up, and spend the next 9.5 years trying to build a small business (expected value = (90% chance of failing to raise VC funding) * (9.5years/10years)* $356.4k ~ $305k).

Three is that the expected value of an exit is not the probability of a minimum exit cutoff times that exit value. There is a power law distribution to success, so the expected value of an exit is much higher than $100M * 2%. I'll be lazy and guess that the expected value is 3x higher due to the power law distribution of success (I imagine 3x is grossly underestimating here).

This makes the expected value of the VC success $3.3k * 10x * 3x ($100k) + the expected value that you give up on VC funding and start a small business ($305k), or approximately $405k. Not nearly so obvious a choice as painted in this blog post.