The Building a Business lecture series continued with a very interesting lecture by Christian Hernandez, of White Star Capital. This is a topic which I don’t know anything about, so I was quite excited to learn more about it.
Hernandez started off explaining that venture capital is capital risqué in French; there is a high amount of risk associated with this type of investment. He then showed some dire statistics: 50-60% of seed-funded companies will fail. To be competitive, vc backed companies need to return 4x the investment, so it was not entirely surprising that for every 100 opportunities, only 1 will get backing. Hernandez noted that angel investing was a bit like gambling, and with the average VC involvement lasting longer than the average marriage in America!
Hernandez discussed a checklist he goes through when determining whether a company is backable. Things like: is the target market big enough? Can this team pull it off? Can they build what they say they will? Companies such as KeyMe, Dice and Bloglovin’ were all backed by White Star, having fulfilled some or all of the criteria. These were all companies with huge market potential; lifestyle businesses are not vc investable due to having a small market.