Emergic: Rajesh Jain's Blog

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Venture Capital

June 13th, 2007 · No Comments

Marc Andressen writes:

Startups that have a credible potential to be sold or go public for a 10x gain on invested capital within 4 to 6 years of the date of funding should consider raising venture capital.

Most other startups should not raise venture capital. This includes: startups where the founders want to stay private and independent for a long time; startups where there’s no inherent leverage in the business model that could result in a 10x gain in 4 to 6 years; and startups working on projects with a longer fuse than 4 to 6 years.

Notably, there are many fine businesses in the world — many of them highly profitable, and very satisfying to run — that do not have leverage in their model that makes them suitable for venture capital investment.

Tags: Entrepreneurship

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