Re:The Quickest Way to Understand VC
by corysama on Friday April 15, 2016 @10:43PM
(#11509051)
Imagine your business was making a solid $1m/year in profit. But, if you had a one-time cash injection of $10m, there's a good chance you could expand to $5m/year in just 2 years. That's a risky but potentially profitable investment that is not interesting to big name VCs. It is an inefficiency on their part. But, their schedules are already overfull juggling the moonshots. I expect there are people working in that space, but they don't get a lot of press coverage.
[ Parent
| on HN ]
Re:The Quickest Way to Understand VC
by ivankirigin on Friday April 15, 2016 @10:49PM
(#11509069)
My point with the "involuntary" aspect is that if you had this thesis, you'd still get power law returns. I'm not sure this has been pushed as hard as it could be, but this is very consistent feedback from VCs.
And my personal experience of investing.
> you'd still get power law returns.
Yep. My scenario was told from the POV of an individual company. That's not a good way to explain the behavior of investors deciding between companies.
Who are the companies (or types of companies) investing in that space?
Lower middle-market private equity firms are probably the most likely investors. Often, they'd want to buy the entire business, but in some cases they might look at taking a minority stake with some control rights.