Thank you Marie, I learn so much of the nuances of VC finance from these posts than any other…
MK Mark Krickovich
11

Hi Mark

Yeah I understand why you’d say that. If of course I can’t disprove what you believe (your point exactly), I can give you a bit of context.

Context one : before joining a VC firm (it’s been about a year), I worked on the founders side in a fundraising boutique to help them get better terms, better valuations, with really good results. And before that I was a founder myself. So I know how some VCs can go to extreme length to justify ridiculous valuations. When you have a choice, you don’t pick them. When you don’t, it’s really damaging to the company (just as much as really high valuations, my point)

Context two : the thing that pains me the most is when a great company has to die because of lack of funding. In Europe it’s very PAINFUL for the founders (and for the employees obviously): the tech media is destroying them, they can be prosecuted, and there is no culture of failure acceptance like in the US. If you fail then you’re a failure. (it’s changing but reeeeeeally slowly).

Context three: the tech M&A market in Europe is 1/10th of the US. Seriously. There is no “20M€ acqui hire” or “40M tech/product acquisition”. The multiples I gave you come from a professional database of tech M&A deals based on the last 3 years. Making the job of European VC really hard but that’s a different topic

So my point is, I decided to write this article after seing several really good startups get into trouble because of a bad setup because I felt really bad for them. I’m a strong believer in bargains that profit everyone. I even write blank termsheets sometimes, and we find something that works out for the best interest of the founders and the company together. To prevent greediness from me/our fund, and to prevent overconfidence in the future performances from the founder.

I don’t think that this will convince you of my point, I just wanted to give you the path that led me to write this little piece. Then again, thanks for reading !