16 Oct Your Deal Is Too Small
Most investment funds–whether private equity, family office or venture capital–have investment minimums. Here’s why:
It takes the same amount of labor, sweat and blood to do a single $10M deal (and sometimes even more) as it does to do a $100M deal.
In addition, the amount of capital in most of today’s operating investment companies requires efficiency and scale in its overall disbursement. That means, more capital is required to be invested in any given deal. A $1B fund is not going to spend time doing $10M deals. It would be inefficient unless they had the manpower, but hiring the manpower now makes the investment company inefficient.
Most deals are much too small to move the needle. Smaller deals are more difficult to accomplish. They are, by their very nature, hairier.
One word of advice–make your deal big enough by building, iterating and progressing further down the growth curve–not simply by asking for a larger, more bloviated valuation.
If you are planning on asking for a unicorn valuation, be sure you can justifiably back it up.