Keynes

One of the fascinating realities in the startup ecosystem, particularly within venture-funded companies, is how perception can sometimes outweigh immediate fundamentals in determining valuations. Many founders successfully secure substantial funding at impressive valuations based largely on the promise and potential of future business growth rather than current financial metrics. The Venture Capital Incentive Structure # The venture capital model operates with a distinctive incentive structure. VC firms typically earn revenue through management fees calculated as a percentage of assets under management, with additional performance incentives when investments appreciate in value. This structure naturally encourages pursuit of companies that can rapidly increase in valuation and attract subsequent funding rounds at higher prices.