Continuing the discussion of early-stage investing, a common thought circling around the venture capital community is that their the traditional investment model is broken. In “Investing without Zombies”, I focused on the odd choice of optimizing the system for the least likely case. But there is a second flaw in that system as well. Exits. Traditional equity investments are worthless until a...
The results of an investment (in an early-stage startup) depend not only on the success of that startup, but also on the form of the investment. A sophisticated investor is going to be nodding right now, thinking about liquidation preferences and other common add-on’s to equity investments. But at the same time, those sophisticated investors likely have a majority of their investments in a state...
