The investment into superstars looks like a new spin on slavery. Shall we call this equity bondage?
Your bank calls, your credit card is at its limit and you just missed your mortgage payment. But don't worry, they are willing to front you $100,000 now for 15% of your future earnings.
I really wish more people would see things your way! If we all thought that selling 15% or more of your annual income was bad, imagine what we'd think of having it taken without our permission!
(Also, is there any price at which you'd call that a fair deal? What if I sold that 15% for twice its net present value? I could do less work, and still have more money! I always thought the problem with slavery was the involuntary servitude thing; knowing that slavery is morally equivalent to venture capital certainly changes things.)
He's listed companies that are already growing. it isn't hard to name startups that are already on track to going great places. its far harder to look at a deck or raw product and work out why it'll be awesome without being constrained by why its broken.
Totally agree. I would rather invest into companies that are starting to pick up traction. Just a personal preference. And invest into superstar entrepreneurs that are about to launch something versus investing into their idea.
I think you're right that many of the companies listed are lifestyle businesses. For example, SquareSpace and Harvest are not interested, and never will be interested, in taking money. However, it's best to weigh every option you're presented with. I'll leave it at that. ;)
That's a great point Spencer. However, I think companies that want to scale faster will need to take investment. Why wait a year to get enough cash in the bank to hire more people when you can do it now? Opportunity costs are tremendous.
It can take a few years (or more) to figure out what your ultimate end goal is. The first few years could simply be about acquiring customers in your market. You can then use those newly acquired customers to explore different business opportunities. Those new business opportunities could require new capital.
With regard to investing into superstars, I can't help but think I already have two investors: my parents.
And to ruin the sentimentality, I guess I've probably returned 2-3% of my gross in gifts, though I never thought of it that way until now. And $300k is probably in the ball park of what they spent to "raise" me.
Your bank calls, your credit card is at its limit and you just missed your mortgage payment. But don't worry, they are willing to front you $100,000 now for 15% of your future earnings.