Archive - March 2014

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Sabotaging Code: 1996 NCAA March Madness Pool
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Consolation Prize When You Can’t Raise Venture Capital? Financial Independence

Sabotaging Code: 1996 NCAA March Madness Pool

I started at the University of Michigan in 1992, right during the Fab Five era. The Fab Five were five freshman basketball players who in 1991, with a totally new coach, went all the way to the NCAA championship. This was unheard of, and the team had a deserved swagger and aggressive style that was addicting. Even if you’d never seen a basketball in your life, if you were on that campus at the time you were crazy about basketball. It was a golden era. It turns out years later they were breaking rules but that’s a topic for a different blog. 
 
As you can imagine, everyone participated in a NCAA pool. My friend across the hall, Andrew Borteck, was an out-of-his-mind Michigan fan and was clearly the guy on the hall who was going to organize the pool for us. Borteck somehow enlisted me to help [it turns out Borteck now works for NBC Sports as an attorney, a fate that could have been predicted in college]. 

Consolation Prize When You Can’t Raise Venture Capital? Financial Independence

One of the hardest things in the venture business is to turn an entrepreneur down for funding, especially one that has invested time in building a relationship.It’s not fun to be on the receiving end of a “no” either, something we are reminded of when we raise capital for our funds.
Not every company should raise venture capital. Venture capital is expensive money. It comes with high expectations that can only be met with very absurdly rapid growth. And not every company can achieve hyper growth. Another way to look at it is that venture capital funds like betting on companies attacking very large and growing markets. This allows for a very high margin of error but also means that if the company is successful, that the value of the company is unbounded. Given the risk of these companies, a big payoff is the only way to get good expected values (and positive-NPV investment outcomes) from the portfolio.

Copyright © 2014 Jason Heltzer