In the venture community the conversation centres around the outlier success stories. But as 8 out of 10 businesses in the space don’t accomplish what they set out to do, this means the majority of businesses are unceremoniously swept under the carpet. This in turn translates into a lot of locked-in capital.
There is a very human, tangible element to backing a founder’s dream in the early stage. As much as anything investors are backing the founder on a personal level as well as the dream they are selling and often angel investors include family and friends. However, we are all grown ups and as investors we know such investments are inherently risky, albeit with potential big rewards should they perform well.
As a community we need to erase the stigma of not going up and to the right because statistically speaking this is the least likely outcome. Up until now there hasn’t been a satisfactory way for investors to exit under-performing stocks in the secondaries market. This, in conjunction with the more personal nature of investing in startups, means investors have traditionally shied away from discussing their dwindling investment with the founder and resentment can build whilst they see their locked-in capital reducing in value or simply moving sideways over the years.
Also from a founder’s perspective, there hasn’t been a succinct, easy way to tidy up the cap table and replace disaffected investors with one passive, supportive investor – perhaps even whilst re-pivoting the business. Not to mention that it is only right that founders have their investors best interests at heart should their business go in a different direction than the original dream.
As part of the transaction via planD, both the founders and investors become part of a smart, connected thriving community now with a vested interest in potentially helping one another. planD customers become investors in the Daxia Fund and as a result have an indirect position in all the companies within the portfolio and it is our intention to foster positive connections within the community for the benefit of the whole – network effects.
PlanD enables these difficult conversations to happen. It acknowledges this reality of the venture community and doesn’t shy away from it. In fact, not only does it acknowledge it, it embraces it, enabling disaffected investors to crystallise an exit – thus potentially recycling losses into other venture ideas.
As Harry Markowitz said “Diversification is the only free lunch in finance”.
Contact us at https://pland.co/contact-us/ for more information.