This adap­ta­tion of Goethe´s famous quote “What you can do, or dream you can, begin it; bold­ness has genius, power, and magic in it” is highly applic­a­ble to the start-up and ven­ture invest­ing world. When start­ing some­thing new and try­ing to make a sig­nif­i­cant dent in the world, bold­ness is a highly valu­able asset to assert, per­haps even a pre­req­ui­site to great suc­cess.

High-tech com­pa­nies in par­tic­u­lar have a lim­ited time win­dow in which they must develop a prod­uct, enter a mar­ket, and achieve a strong, pro­tectable posi­tion. Hit­ting this win­dow requires attract­ing the right employ­ees, cus­tomers, and cap­i­tal; and it cer­tainly requires bold­ness to exe­cute it all in the right way.

Bold­ness means think­ing big and believ­ing that one can change the world. It is the world-chang­ing out­lier suc­cesses that largely deter­mine results in the log-rule busi­ness of start-ups and ven­ture invest­ing. Thus, we at bm‑t, like many ven­ture investors, appre­ci­ate bold­ness in the com­pa­nies in which we invest; and we are will­ing to pay a pre­mium for an ambi­tious mind­set.

If bold­ness is not a met­ric you have seen before for deter­min­ing val­u­a­tions, let us explain. Ven­ture investors are pre­pared to grant higher val­u­a­tions to com­pa­nies because they are more ambi­tious, ceteris paribus. If a com­pany is rais­ing 1 Mio. EUR and VCs value it at 4 Mio. EUR pre-money, that same com­pany will be val­ued higher on a pre-money basis if it wants to raise 5 Mio. EUR, assum­ing that it has a well-founded plan for putting the larger amount of cap­i­tal to use in order to progress faster, thus greatly increas­ing its chances of being a break­through success.

Essen­tially what ven­ture investors are sig­nal­ing with this think­ing is that increas­ing the chance to have an out­stand­ing win­ner is more impor­tant than the increased risk of los­ing the addi­tional invested cap­i­tal. Expressed another way, the risks of not being bold and miss­ing impor­tant win­dows of oppor­tu­nity by not scal­ing fast enough to attract the next level of tal­ent, cus­tomers, cap­i­tal, etc. are much greater to a ven­ture investor than the risk of los­ing invested cap­i­tal with­out hav­ing had a legit­i­mate chance at success.

Are we advo­cat­ing reck­lessly spend­ing extra cap­i­tal on bold, untar­geted mega­phone-mar­ket­ing or empty pro­mo­tion? Absolutely not. What we are advo­cat­ing is for young com­pa­nies to not think “how can we find a lit­tle open­ing in the mar­ket to squeeze our unique tech­nol­ogy into”, but rather “how can our break­through tech­nol­ogy com­pletely rev­o­lu­tion­ize a mar­ket”. This type of trans­for­ma­tional think­ing is essen­tial to achiev­ing big wins.

Hav­ing auda­cious goals and putting sig­nif­i­cant cap­i­tal at risk to reach those goals increases scrutiny on a start-up. When han­dled appro­pri­ately, this increased exter­nal inter­est in the com­pany is an asset and should improve align­ment between all par­ties work­ing toward the start-up´s suc­cess. Thus, founders should not be reluc­tant to share the full impact and poten­tial of their vision with the world, espe­cially with investors. There is a high like­li­hood the bold­ness will res­onate and bring more energy, com­mit­ment, cap­i­tal, and value(ation) to your vision.

Your bm|t Team