In a recent post for entrepreneur.com, “Why I Don’t Want to Get in on the Ground Floor of Your Company,” Carol shares why she often prefers to invest later in a company’s growth cycle. She begins:
“I’ve played many roles in an advisory capacity for companies, ranging from helping them raise capital — more than a billion dollars’ worth — to giving strategic advice and even investing my own capital in a variety of private entities. Between that and being a well-known business personality, I often get approached regarding making investments.
For brand-new or even pretty early-stage companies, they often try to lure me with a phrase that they must think is enticing, but really is a turn-off: “It’s an opportunity to get in on the ground floor.”
Well, given my choice of when to get into the elevator with you, I’d much rather get in on the floor right before we get off than on the ground floor or even the first floor. In fact, the greater majority of private investments that I have made have been in well-established companies seeking later-stage expansion capital, with a preference for investing in the last round before a company explores strategic alternatives — a financial industry code phrase for “seek some type of exit or liquidity event,” like a full or partial sale of the company or an initial public offering (IPO).
The reason is that I, like most investors, I am looking for probabilities, not possibilities when it comes to making investments.”
It’s a thought-provoking post that takes you inside the mind of the investor. You can read the rest of it here.