Investing case studies

8 investing decisions with the alternatives that were genuinely on the table, what was chosen and what happened. Composites, not named people or funds.

• A genuinely excellent company at thirty times revenue — The business was as good as it looked. The question was whether the price left anything for a new investor.
• The business made no sense; the founder was the best they had met — Backing a person rather than a plan is either the oldest wisdom in early-stage investing or a way of making the evidence optional.
• A vast market reached by paying more for customers than they were worth — Revenue tripled every year, and every unit of that revenue destroyed value. The market size was never the problem.
• Revenue up 140%, and each new cohort worse than the last — The headline growth was genuine. The cohort table showed the company was refilling a bucket that was emptying faster every quarter.
• Customers adored it, and there were not enough of them — A profitable, admired, stable company that could never produce a venture-shaped return, and the investor had to decide which of those facts mattered.
• Growing 120% while spending four units of capital for each unit of new revenue — The growth was real and the burn multiple made it unfundable the moment conditions changed.
• Four hundred thousand to keep two per cent — A working company, a large pro-rata cheque and a reserve that could only stretch to one of three requests that quarter.
• Forty-two million now, or a Series B and the chance of much more — A clean offer, a divided cap table, and a board where the people voting held a different class of shares from the people affected.