Taking off against the Wind

Venture capitalists and pilots possess similar traits - both are required to go against the current to achieve success. Henry Ford noted that a pilot’s best choice is to take off against the direction of the wind, because it’s easier for the aircraft to reach the necessary amount of lift. When the wind is going in the same direction as the airplane, it becomes more difficult for the wings to produce lift. Similarly, VCs like to invest in companies that have a product or service that goes against the norms and disrupts the current ecosystem to make the market / process more efficient for the customer, entrepreneur, and everyone involved.

VCs like to invest in path breaking companies that disrupt their current market. This is seen in the common progression of technological advancements; the printing press replaced the scribe, the light bulb replaced the candle, the email replaced the letter, iTunes replaced the CD, etc.

In a recent Econ Talk Podcast, Marc Andreessen, the co-founder of Netscape and a venture capitalist, says that there are “about 4,000 tech startups a year that want to raise venture capital. Of those maybe 400 of those will get funded by top venture capital firms. Of those [400] about 15 will be responsible for over 90% of the profits for that entire year of companies.” Realistically, most companies won’t be a massive success, so the biggest returns, as a whole, come from companies that grow at a rapid pace. Andreessen remarks that most of these successful companies go under the VC radar because they are “non-consensus,” which means that a company is apparently destined to crash and burn because its product is so radical, or its market has a high barrier of entry, or its management is questionable, or sometimes all those and more! But this is why it’s called venture capitalism; venture being the shortening of the word adventure.
If you’re a company or a CEO with a disruptive service or product, visit us at nin.vc to submit a business plan. Taking off against the wind is difficult, the end is unknown, and potential for disaster is evident. Regardless of the success during flight simulation and knowledge of the manuals, there’s always a risk, BUT WE CAN HELP!