I have noticed that venture capitalists tend to talk more about their home runs than their strikeouts. Angel investors, on the other hand, prefer to relentlessly revisit their pain. Maybe that's because angels put up their own capital. They truly eat their own cooking so it's harder to forget their fallen souffl?s.
VCs achieve their highs from the opium of OPM (that is, Other People's Money) …so even a bad trip is still a free trip.
I recently had lunch with an inveterate venture investor (aka "angel") whom I had co-invested with in a biotech, as well as a med-tech, company, several years back.
The biotech company was a true home run–a high-multiple exit realized in a 2004 IPO. But rather than relishing in a reminiscence of our raison d'?tre, we chose to get muddy in the mire of our miss–the medical company that nearly seven years later was still trudging along with neither an exit nor a write-off in sight.
There is the baneful scenario–five or more years in an illiquid private investment that just keeps rolling over but never plays dead, and then there is the painful scenario–a company running profitably for several years straight but no IPO, acquisition, or distribution on the near horizon.
What to Do, and What Could Have Been Done?
Two questions dominated our discourse. First, what would become of the med-tech investment? Second, what could we have done differently as investors to avoid non-outcome outcomes?
