PRINCIPLE 2
NETWORKS TRUMP KNOWLEDGE
Whenever I teach a course on venture capital, without fail, the most popular question from my students is, “What is the mathematical process of valuing a startup? How do you apply the right multiple to their revenue numbers to arrive at a proper valuation?” No matter how many equations, case studies, or scenarios we run, however, my students are never satisfied with the answer. What I have tried to emphasize, but nobody wants to hear, is that your valuation methodology is essentially irrelevant when it comes to creating your own success in venture capital.
You can optimally value a startup and write a technically airtight term sheet (whatever that means), but if you don’t know the right people to make it ...
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