I heard this through the grapevine.
If angel investors back high-tech companies like those at VT KnowledgeWorks, they want a 500% return on their investment.
For example, if they fund a company with $50K in year one, they expect $250K in year five.
An angel investor might fund a company up to $2 million.
Venture capitalists want a 1000% return on their investment.
If they fund a company with $1 million in year one, they expect $10 million in year five.
Venture capitalists might fund a company up to $10 million. And they might invest several times.
Who has control, how much, who owns what, and what milestones must be met all become very, very big deals.
I’ve had a few lives. I mentioned one as a poet. In one of my lives, I wrote a money tips column for the St. Petersburg Tiimes, Florida (so long ago I couldn’t even find myself in the search results. I have the clips if you want to see them). I wrote about laddering certificates of deposit.
How ’bout those returns on CDs? 4%? Tops of 6%?
When a high-tech company and an investor have a meeting of the minds, it’s a very, very big deal.