Before I got into the venture business, it seemed like there were a number of rules that many VCs held as sacred.
I won’t go into all of the “rules” on this post, but the most typical one was the “20% rule.”
The idea was that VCs would tell founders (and their limited partners) that they always own 20% of the startup at the time of their initial investment.
The reality is that since we started Spark in 2005, we haven’t embraced that rule. (We try not to have too many rules actually). Sometimes we own 20%, sometimes we own more and sometimes we own less. It depends on lots of things.
And this approach has served us well. Many of our best investments have come from startups where we ended up owning less that 20% initially but either a) the startup radically increased it’s value over time and our position became worth tens or hundreds of millions or b) we were able to respectfully increase our ownership over time thru one or more inside rounds that were good for the company and good for us.
To read the full, original article click on this link: The evolving venture capital business | bijansabet.com
