Brian Caulfield on the biggest difference between entrepreneurs and venture capitalists
"They're always thinking about portfolio."
While the phrase "it's not personal, it's just business" isn't exactly a new one, it's still worth asking whether or not that is the case for an entrepreneur. Most of their time, and usually all of their money, goes into getting the business off the ground and it's next to impossible to stop that having an effect.
Speaking on the latest episode of All In, backed by AIB, investor Brian Caulfield of Draper Espirit said that is exactly what separates them from venture capitalists:
"The biggest disconnect between investors and entrepreneurs is that from an investor perspective, they're always thinking about portfolio," he said.
"They're comfortable taking risk in each individual investment because they're going to make 20 investments. Many of those will fail, but the successes will outweigh the failures."
"So when an investor is looking at a company, they look at it as a portfolio asset, and they have an enormous choice of portfolio assets, you know?
"We probably look at 3,000 investments a year in Draper Esprit and make, you know, maybe 10 to 20 investments in total. So each investment is a portfolio asset."
"The risk that they take is much, much bigger.
"For the entrepreneur, on the other hand, it's enormously personal. Frankly, the risk that they take is much, much bigger than the risk that the investors take because, if you like, they're risking their entire career, capital, everything goes into this one business.
"And that's the biggest disconnect, this disconnect between the hugely, hugely personal and the relatively impersonal portfolio mindset that a VC typically has."