venturecapital

What's one question you have about venture capital?

Building something new. 🟪 Host: /venturecapital /adventures /theitinerant

Why don’t VCs learn how to get rich off revenue and dividends instead of equity which would better align their interests with that of the project mission so long as founders build smaller hyper efficient teams to maximize quality revenue per person?

@backpack put a bank in your pocket and use your money whenever, wherever, however without permission

/backpack
/notdevin
icebreaker.xyz/notdevin

no outsized winners in this model, right?

it’s all about IRR, and although dividends would be long term sustainable - they aren’t attractive as an asset class

you probably don’t think about liquidity enough // it is what it is  // build value, not valuation

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Could be a fun roll up model - but 70-80% net margin is hard in a lot of industries. Dunno if there’s a lot of businesses with this profile? I’m naive on it

Let’s say you had a claim on 10% of the profit from a small team doing $10m a year in revenue at a 70-80% net margin, your take is $700-$800k per year or about 30% of what you’d get from fees in a $100m fund from one position. 

Now let’s assume you’re a normal fund and deploy 30-40% into companies that all look like this. Pretty sure this model would fuck. 

Fuck it, I want to do this now. Someone stake me up. I’ll run this model experiment based entirely on small teams of savage operators where the portfolio yields outsized returns based entirely on revenue share