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Comment by siong1987 | Hacker News Reader

siong1987

This shows that idea is not really something that VC pays for. It is always the team behind the idea.

Or the hype behind the idea.

With $5 million, the investors/founders believe it can be at least a $10 million dollar company in the next 5-7 years. I personally wouldn't have made that bet but at least they are charging money for their app.

There's a VC out there that's happy with a 1x return in 5-7 years?! Your estimates are way, way too low. ;)

Oops, I meant to write $100 million.

With $5 million, the investors/founders believe it can be at least a $10 million dollar company in the next 5-7 years.

The $5 million investment did not buy the entire company, so the valuation might be north of $10 million right now. Did you perhaps mean $10 billion?

He probably just slipped a digit and meant $100 million. I figure that if you take VC money you believe you can build a company worth $100 million.

I figure that if you take VC money you believe you can build a company worth $100 million.

Granted VC David Hornik in the following video is referring to revenue potential, I still think that what he says implies that VC's are looking for investments with potential exits far greater than $100 million.

http://www.youtube.com/watch?v=epdTQf0ZhPE

"Billion dollar companies? We like those, but we really prefer $100 billion companies." -David Hornik, August Capital

To clarify I meant that as a lower bound. In other words, don't take VC money unless you believe you can create a company worth at _least_ $100 million.

If this catches on in the enterprise they could make a killing. The sales cycle is killer, but the margins are usually ridiculous.

Completely agree that the team is very important in getting funded, but so are connections.

Yammer is Founders Fund backed. 3 of the 4 partners from the Founders Fund are PayPal cofounders (Peter Thiel is the big name, but there's also Ken Howery and Luke Nosek) - Yammer's CEO David Sacks was the COO at PayPal before its acquisition.

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