Failure · Fundraising

How much value is placed on your past success?

William Mead

September 9th, 2014

In regards to fundraising how much emphasis is placed on history? And if an individual has had any success as an entrepreneur, what are the key highlights that investors look for, aside from the obvious? And are failures worth even mentioning?

Cheers!
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David Crooke Serial entrepreneur and CTO

September 12th, 2014

VCs don't have the domain knowledge in house to truly understand and evaluate an idea. As such, anyone who has successfully founded and exited a startup in the past, especially as CEO, can raise money for almost anything. The presumption is that they know what they are doing.

Bill Duncan Customer Sales,Industrial Engineering,Packaging,Logistics&Supply Chain

September 9th, 2014

Hello William,I do not place   much emphasis on history except for the mistakes that Napolean, Hitler, and now President Putin have made.Do not take on  too many fronts at the same time.
Failures are to be expected but you learn from them.

Goro

September 9th, 2014

Well, to be fair... both Napoleon and Hitler were great entrepreneurs with an awful biz plan. :-) 

Bad jokes aside: The weight on history is another measurement to assess your potentiality to take your company to the required level. If you don't have any experience in your market (and your market requires it), well.. in that case lack of history might be a determining factor. But if you show Knowledge + Passion, then you can take that drawback to a minimum level.

Cheers and good luck!

Goro

September 12th, 2014

David, that is probably the most wise comment I've read in a long time. I agree with you, it is really hard to see a good / useful / worth project coming out of a VC, as they usually fail to see it as the way they work forces you to be a good salesman of your own image. Checking stats on how many VC backed companies actually end up profitable is a good indicator there's something wrong with their screening process.

William Mead

September 12th, 2014

Presumption... Hehe. Didn't miss that.

Gaston, care to elaborate on your comment about VC performance history? I find it baffling that the failure rate is so high, yet the money still pours in. Similar to how motion pictures make and lose money on the grandest scale.

David Crooke Serial entrepreneur and CTO

September 12th, 2014

The rule of thumb I knew used to be this:

100 deals looked at
10 funded
3 miserable failures
3 barely break even
3 decent
1 hit