Which investor the founders should select as growth partner?

Did your investor really earn money before?

The best quality an investor should have is earning cash flow. Before successful real distribution to their LPs, general partners or portfolio must have plenty of free cash flow.

VCs can pretend to have “big power”

There are very many Venture Capitalists who do not have a track record of real distribution that surpasses market benchmarks: the VTI-Vanguard Total Stock Index or the SPY-S&P 500 Index. The 10-year average of these widely available mutual funds is a 12% IRR. If an investor does not have experience returning more than a 12% IRR in cash to their LPs, then there is no economic justification for allocating funds to that Venture Capitalist.

Founders should find qualified venture capitalists

Qualified Venture Capitalists who can beat public benchmarks tend to have a capability in consistently generating value and growth. In short, your investment banking partner’s performance can determine your destiny as a founder if you want to build wealth.