Why Venture Scale?

Does it have to be venture scale?

A short story from growing up. I really wanted to be the best footballer. I remember sneaking out of the house to watch "township" games at Okere School (my mum worked there). I would imagine the dribbling and picture myself as the guy who was doing this. I badly wanted to have "bow legs" so I could dribble better. Needless to say, I didn't become the best footballer. Messi or Ronaldo is. I didn't have the years of training and can't possibly make up for all of that by simply wishing it to reality. I couldn't practice a lot too because I needed to be in school.

However, one quick lesson from that period is what I want to share. Immediately I changed my framing, my football became better. I started thinking about our neighborhood 'league'. I could become the best striker there. The level playing field was better. Everyone had to go to school, so the advantage of more practice is less pronounced amongst us. We were all fiercely competitive so very good. I started by observing the goalkeeper and our best striker. It was easy to find some weak spots. For instance, I learned quickly amateur keepers are slower on their left side if they are right-handed etc. By understanding what was possible, I quickly became a decent player.

Now, I am not saying you should tame your goals. But have you ever considered if you thought of your venture as something that has to bring sustainable returns rather than outsize upside, you will be more energized to pursue this venture and better chances at achieving these goals without burning out? Put this in perspective, when you take a $100k from an angel at $2m valuation, you are essentially committing to 10x or more return, meaning a $20m dollar business. Depending on what industry you are in, that's anything from $20m in sales. $20m is achievable in most businesses but will a $100k get you there?

Then, you raise another round, and another round with soaring valuations until you have been completely diluted out of your business that even in the event that you do achieve your goal, the equity upside will most likely go to someone else.

Can a better strategy be I want to build a profitable business in a year? Give yourself the opportunity to learn. Raise little at generous terms. Remember Jeff Bezos story? Roughly 20% of the company to angel investors at super generous terms. At the very early stage — it is no better than a gamble but you can game the gamble by understanding the game you are playing. If you are playing the valuations game, then you must be in a field with massive chances of building $50m+ scale business. Maybe you should be in the small business game where you can bet on yourself with $20k to build a profitable business and be the captain of your own ship?