Silicon Valley Daily

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

Working on Farcaster and Warpcast. Longer thoughts at https://dwr.email

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.

Building getinboxzero.com and sharemint.xyz.

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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?

You have to assume that 90% investments are a zero. So you need the outlier returns to make the IRR worth it.

Farcaster Development Boutique @ https://dTech.vision 💜 in love with tech 🤓decentralization, fitness and oldschool rap 😎

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.

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