Flushing Money Down the Toilet

This post is by Jeff Carter from Points and Figures

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It’s St. Patrick’s Day.  May the luck of the Irish be with you.  Many people think that startup investing is pure luck.  It’s not.  Some people like to say before you startup invest you should take a bunch of $100 bills and flush them down the toilet.  Or, burn them in a grocery bag.  That’s not it either.

It’s funny because there is risk in startup investing but while I understand where the shorthand came from I don’t necessarily think it’s a good correlation.

One time I gave a piece of advice to a person that wanted to be a VC after a successful career.  I asked, “Have you ever given someone $50k where you had no control and they lost it?”  This person had not.  I said, “I suggest you do that a couple of times before you become a VC because not only does it make you it also conditions you to the way the game is played.”

Startup investing is about hope.  When a startup dies, hope dies.  You don’t invest money thinking you are going to lose it.  You invest in the dreams of other people.  You give up control of those dollars and trust those people to do something with it.  If they fail, their dream dies and so does your hope.

As an investor, when you are successful and those dollars come home at a multiple of where you invested, you get the chance to spread more hope around.  More dreams get funded.

It’s not necessarily about the money, although that part is painful too.