Black swans. Funding bad ideas
Venture financier Sam Altman (Sam Altman) from Y Combinator shared his experience in financing startups at an early stage. He says that since 2010 he has invested in about 40 companies, and now 5 of them have reached a good level of return on investment (100x or more).
“I thought a lot about what these investments have in common, and how they differ from others,” writes Sam. “And the most noticeable difference is that, in my experience, very few people wanted to invest money in them at an early stage.” There is a certain anti-correlation between the number of investors and the subsequent success of the company.
One of these companies is Stripe, an online payment processing center that was founded by 21-year-old red-haired boy Patrick Collison. The startup has conceived - no less, no less - to challenge the banking system and accept payments online. In addition, the young programmer had no experience in the financial sector. It is not surprising that no one wanted to invest in this “hopeless” business.
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For reference, as of February 2014, Stripe's market value was estimated at $ 1.75 billion .
Similar stories with three other startups, which, after the start of their activities, began to develop exponentially. For example, experienced investors said that Zenefits will not live even for three months.
That is, there is a strange tendency. “I emphasize that if other investors say that the investment is bad, this does not guarantee success. When my investments failed, they also warned me about it. To go against all and to be wrong is still bad - you have to go against all and be right. "
Many great companies at first looked strange and incomprehensible to others. The bottom line is that if they initially look good, they will most likely be overvalued, and together with them they will finance other similar companies, which will later become their competitors.
“I asked several other investors, and most of them expressed the same opinion. Most of the most successful investments come from companies that were not considered promising. ”
Sam Altman believes that there are several reasons. First, talent to collect money and talent to manage a company are two different things. Secondly, many investors actually try to avoid risks, although they say the opposite, and great companies look very risky at an early stage. And the most important thing is that at the early stage it is very difficult to choose from a huge number of startups, where almost no one wants to invest money, and future great companies also often find themselves among them.
Perhaps the most profitable option is to invest in random companies ?
“I thought a lot about what these investments have in common, and how they differ from others,” writes Sam. “And the most noticeable difference is that, in my experience, very few people wanted to invest money in them at an early stage.” There is a certain anti-correlation between the number of investors and the subsequent success of the company.
One of these companies is Stripe, an online payment processing center that was founded by 21-year-old red-haired boy Patrick Collison. The startup has conceived - no less, no less - to challenge the banking system and accept payments online. In addition, the young programmer had no experience in the financial sector. It is not surprising that no one wanted to invest in this “hopeless” business.
')
For reference, as of February 2014, Stripe's market value was estimated at $ 1.75 billion .
Similar stories with three other startups, which, after the start of their activities, began to develop exponentially. For example, experienced investors said that Zenefits will not live even for three months.
That is, there is a strange tendency. “I emphasize that if other investors say that the investment is bad, this does not guarantee success. When my investments failed, they also warned me about it. To go against all and to be wrong is still bad - you have to go against all and be right. "
Many great companies at first looked strange and incomprehensible to others. The bottom line is that if they initially look good, they will most likely be overvalued, and together with them they will finance other similar companies, which will later become their competitors.
“I asked several other investors, and most of them expressed the same opinion. Most of the most successful investments come from companies that were not considered promising. ”
Sam Altman believes that there are several reasons. First, talent to collect money and talent to manage a company are two different things. Secondly, many investors actually try to avoid risks, although they say the opposite, and great companies look very risky at an early stage. And the most important thing is that at the early stage it is very difficult to choose from a huge number of startups, where almost no one wants to invest money, and future great companies also often find themselves among them.
Perhaps the most profitable option is to invest in random companies ?
Source: https://habr.com/ru/post/231419/
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