VCs and trouble

0:03 Welcome to business purpose and clarity with petri I'm your host we talk about startup life insights practical tips mistakes failures and everything between called nobody knows you when you are down and out give a bit of a readout of the lyrics so you can relate to to the today's topic nobody knows you when you down and out in your pocket not one penny and as for friends you don't have any when you finally get up on your feet again everybody wants to be your all long lost friend said it's mighty strains without a doubt nobody knows you when you down and out does that sound familiar maybe it's not like a bank you get the loan when you don't need it and when you need it you don't get any or maybe it sounds like vc's they are knocking on your door when everybody else is knocking on you though and when you actually need the money.

1:08 And not everybody is knocking on your door there's nobody knocking on you so it's like binary world either you're famous and everybody knocks on your door and you get a lot of good term seats or there's nobody on your door and then it's really hard to get anything done of the table the easy side it's not their money usually well gps the general partners put some money in but usually it's other people's money in there when the times when we head into the bear market stock market is down so the portfolios are down a lot of if you've been investing in crypto they are down so basically everybody feels less wealthy it just feels like that if you haven't materialized the losses yet the thing is that vcs don't have all the money sitting on.

2:11 The bank waiting for the investments so if they have like 100 million funds it's not like the tests 100 million floating around when they get started no it doesn't work like that they are actually calling the money in when needed and that happens in some kind of when we are now in a situation where valuations are down stocks are down those lps limited partners the vc funds need to get the money somewhere they don't have it in the bank either just waiting for the to happen they have invested that money how do you like it when you have invested in some stocks or something and now it's in negative and somebody says that well take the money out I need it now because you would prefer to keep it and wait that it went down but I think it will go up so if I don't take.

3:14 It out we could well that's not happening if you need the money you have to take it out so you're realizing the losses and that's not nice if you have to put it in the books that's also it in your balance sheet as well and profit and loss and you're responsible usually for other people as well so you actually materializing the losses what happens with vcs and they don't usually like to talk about this so if you're getting weird responses from them and they're saying that no we like your case but we want to wait you're investing now and they can even say something really weird and stupid well we waiting for maybe to the q2 next year and seeing whether you will survive or we will wait when your gas situation is worse and then we take advantage of that one and then we make deal who says tab who likes to look like well you know what the reality is that it may be that.

4:16 The lps are actually in preach yeah they have contracts but and they say that yeah we supposed to give you the money for new investments but nah we are not doing that we are not giving you the money we promised to give you per the agreement we did you as a general partner of the tvc fund what can you do you could sue them for sure but it still doesn't give you the money you still cannot invest so it's not good for your reputation it's not fun for anyone it can take years and yet you're not making those investments because well if they're not giving you the money they're not giving you the that could be one reason I'm not saying really common but it could be one reason why business are not investing whatever they're telling it may not exactly be the total and complete truth there may be stuff happening behind the scenes as well of course there are also some other other reasons.

5:21 Well some some are taking advantage of the situation waiting for the winners to come out and getting a good really good bargain others are not having too much gas left to invest so they are preaching and keeping afloat the existing that's taking day time and effort understandable obviously because if they existing portfolio companies are not getting new investors in and and they're having hard time either it's the same situation as earlier either you will try to keep them till the situation gets better or you will actually realize and materialize your losses so this company is going past and the money is lost there's also these follow the crowd type of situation of course there's also the other situation where some of the really good vcs are looking and they have gas in the bank and they've been around and they know that this is the time to build and that's my message.

6:25 Find those ones find those ones who actually been around are eager and willing to invest but be you are competing with other really good cases at this there's less money around and you competing with the other star founders who have figured out the same thing and maybe they're listening to my podcast as well so they are thinking the same thoughts as we speak or my I speak at least it may not be you it may not be your while you are getting no's or it may be the vc the investor and this applies to in some extent due to insulin investors as well if they portfolios down as well they need to support the existing investments as well and they don't want to realize uh the losses it could happen if they would invest in you so they have actually if you think about it it's not really fun.

7:27 Your cryptos are down all your stocks are down and then you have to take out some of the money and realize the losses in order to invest on you so you should be really honored if that's the case there are some investors obviously who always have a stack of cash so they don't need to take out the money from investments which are at the moment in and those are the smart ones so keep on hunting good luck talk to you soon.