“Great,” I’d reply. “So as a venture capital firm, I could give you $1 million to start your sneaker company. And maybe, in 10 years, your company grows so big that Nike wants to buy you for $10 million. Once that happens, you would make $8 million for selling your company, and we would make $2 million for helping you start it. Make sense?”
Imagine how great VC would be if the numbers worked out that way.
Instead of once you've worked out most of the kinks and started hiring an awesome team we come in and give $1m, then dilute your position continually until you own about 18% so you need to create a $1B company to make the numbers work. Because unfortunately it works out only about 1 out 500 times and most of the time you end up broke.
