"The truth is, when you're given too much money, you’d want to accelerate, which is fair, but then, you become sloppy because it's human psychology that when you receive a lot of money, you spend it. We can see this in lottery winners where they often spend the money unproductively and they end up in a situation where it's better off than where they were in the first place, but it's not uncommon for them to squander a large chunk of it. That's also what happens to a lot of management teams. It's not because they are sloppy or lazy, but because the VC boards are egging them on because they’d rather have a 50% higher chance of you becoming a billion-dollar company and take on the other half of the 50% chance that you go to zero. So they want to push you to high risk, high reward. If you are smart and creative with the funds that you have, you’ll figure out a way to squeeze out efficiency. The growth may not be as high and you may not be able to achieve that billion-dollar outcome within 10 years as much, but you're able to reduce the floor risk of the company." - Jeremy Au
"Venture capital funds are for high-risk, high-reward companies. They look for those that can become a billion-dollar company within 10 years. They promise to limited partners or the funders that provide that capital that they should be able to generate about 15% to 25%+ net IRR or returns on capital on an annually compounded basis because they're investing in a portfolio of 20 high-risk, high-reward companies, out of which probably one or two of them will be able to achieve that billion-dollar valuation." - Jeremy Au
"You should always think about your burn multiple. The burn multiple is about the amount of free cash flow over your net new ARR. In other words, it looks at the productivity of the company and whether you're generating new revenue that's recurring, and dividing that by the amount of cash that your company is spitting out. It's a helpful metric for you because it gives a very strong insight into your fundamental efficiency and the creativity of the business.” - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast" - Jeremy Au
In this episode, Jeremy Au speaks on the bootstrap versus venture capital dilemma, the 2x2 matrix decision, and time machine regrets.
Keywords: Bootstrap vs Venture Capital Dilemma, 2x2 Matrix Decision, Time Machine Regrets, Southeast Asia, VC, Thought Leadership
