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March 08, 2006
Skype's backer on considering the upside
Last night at an event in Bern, Switzerland, Neil Rimer, a founding partner of Index Ventures, a European venture firm that is best known for its consumer Internet investing, gave some insight into how his firm arrives at an investment decision.
“My partners and I try to focus on what can go right, as well as what can go wrong. Investors sometimes get too caught up in looking at the risks in a venture and forget to really analyze how big something could be if things go well.”
Rimer says don't forget to consider the upside.
Seems pretty obvious, but anyone that has spent any time at all with VCs (either as an entrepreneur or in an interview) knows, they can be pretty risk-oriented, or even rejecting, when talking about a venture's potential.
Rimer added: “Naturally you cannot ignore the downside because very often the risks outweigh the upside but in the case of the Skype investment the opposite was true."
He was speaking at the Swiss Talents For Innovation (dubbed Switi) confab in Bern. He had been invited to describe to the gathering of a couple hundred entrepreneurs and a smattering of investors on why his fund invested in a startup with two founders that never finished high school, that couldn’t travel to the US because of their previous venture’s clash with the RIAA, and who wanted to give away their software for free. In other words, why Index invested in Skype.
Read - SwiTi Event
Posted on March 8, 2006 09:09 AM | Posted to Venture Capital | Permalink
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