Chapter 10

Leading the Risk Conversation

In This Chapter

arrow Thinking about risk as the number one investor concern

arrow Linking risk and value

arrow Dealing with risk through transparency

arrow Accompanying risk with mitigating strategies

Risk is an inherent element in early-stage companies. The word risk itself suggests danger, possible failure, and a whole package of bad feelings. In the world of venture capital, risk means something a little bit different: risks are the milestones that your business must accomplish before your company can reach its goals. These potentially beneficial steps along the way are referred to as risks because they’ve not yet been accomplished. If the company doesn’t achieve them or doesn’t achieve them in a reasonable time frame, it stands to fail at accomplishing its final goals.

remember.eps In a meeting with founders to, we were discussing risk and its relationship to valuation. One of the entrepreneurs slapped his hands down on the table and said, “Why do you keep calling it ‘risk’? ...

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