VC Math Demystified: What Founders Must Know Today

Pitching to VCs? Understand their math and incentives first.

Venture capital is more than just funding—it’s a high-stakes game of expectations. In this episode of P&L, Kevin Brockland, Managing Partner of Indelible Ventures, and Yeoh Chen Chow, Founder of 1% Advisory & Coaching, break down VC math and incentive structures and why it's vital for founders to understand all this.

From the 2/20 model and failure rates to aligning with a VC’s growth expectations, we explore why “fundraising is not a trophy” but a responsibility. Plus, learn how to choose the right investor, pitch your business as an opportunity, and navigate post-investment dynamics effectively.

Here are some key highlights from the conversation:

- VC Math Fundamentals: A breakdown of the 2/20 model, high failure rates, and the need for outsized returns. Explore how these calculations shape VC strategies and expectations for startups.

- Why Founders Should Care: Understand the importance of aligning your business model with VC expectations and why “fundraising is not a trophy but a responsibility.”

- Misconceptions About Venture Capital: Debunk myths like VCs being inherently wealthy and uncover the challenges of managing funds and delivering returns.

- Choosing the Right VC: Discover the value of chemistry and alignment in the founder-investor relationship, along with tips on finding a VC who aligns with your vision and stage.

- Positioning Your Pitch: Learn how to frame your business as an opportunity rather than a plea for funding, while balancing ambition, scalability, and realistic goals.

- Post-Investment Dynamics: Highlight the role of transparency and trust in the founder-VC relationship. Understand how VCs can contribute beyond funding through operational guidance and strategic insights.