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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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Dan Romero
@dwr.eth
You have to assume that 90% investments are a zero. So you need the outlier returns to make the IRR worth it.
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Elie
@elie
That number isn’t accurate. But even assuming it’s 90% failure, does this mean you pass on the more “expensive” rounds and still get the exact same 90% failure rate?
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Elie
@elie
Re 90% https://avc.xyz/startup-mortality-rates @fredwilson.eth
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Dan Romero
@dwr.eth
and I think that number is fairly accurate if you are focused on seed / series a
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Dan Romero
@dwr.eth
If you're trying to return a fund (to raise another fund), yes. If you're an angel investing to support a friend / make money / pseudo entertainment and status, then no.
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Kieran Daniels
@kdaniels.eth
It is though. A killer fund loses 8-9 out of 10 bets. That’s a good return usually because they are betting with size and early with control. Often hitting 1 out of 10 recoups and profits the entire fund. To hit more than one is money zone. Angel investing is great but this is a normal return for size and dilution. In general angel investing returns much less than people assume, unless you can make a lot of bets to average out the losses.
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