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Dan Romero
@dwr.eth
Given today's acquisition news, a reminder that entry price is hugely important in angel / venture investing. Here's a good concrete example of what a "unicorn" is worth at different entry prices. https://blog.zactownsend.com/empathy-on-entrance-price-bridge-dot-xyz-and-astranis
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Elie
@elie
But what do you do with this? Pass on an investment that’s going to give you a 20x return? In most cases investors aren’t in a position to negotiate price as they’re not the lead. And even then there’s competition for the best investments which pushes up price.
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Samuel ツ
@samuellhuber.eth
It’s not about whether or not to pass on a 20x It’s about being weary of price points and keeping your mind sharp when looking at the terms A 20x on a seed with 100$ Million POST is statistically very unlikely while a 20X on a 2$ million seed is comparatively way more common Situations are situational and investment are situations, so the context shall be considered, which I deem to be the point Dan is eluding to
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Elie
@elie
Both early and late stage companies can do well. If anything a company is more likely to succeed when already at a later stage. Which is why price is higher.
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Dan Romero
@dwr.eth
> If anything a company is more likely to succeed when already at a later stage. Which is why price is higher. that may have been historically true, but median company the last few years raising larger rounds at higher valuations is underwater
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Elie
@elie
True today as well. The company raising 2m has lower chance of succeeding than the one that’s raising their series b. That should be obvious just from companies you see yourself. It’s simple higher risk higher reward for getting in earlier. It’s not 90% failure for preseed, seed, a, b… how could it possibly be the same failure rate. Truly remarkable quirk of history if that were true.
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