Charles HudsonFounder and Managing Partner, Precursor Ventures

Overpaying for Special Companies #venturecapital #startup #founder

22 Jan 2025 · 1 min

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Charles Hudson (YouTube, Jan 22, 2025) argues that truly exceptional businesses often outgrow expectations and that a core venture-capital challenge is deciding when a company is "special" enough to justify overpaying at entry. He cites examples of investors who backed Facebook early (at $550), Stripe (at $1B), and OpenAI (at $1B) and notes overlap among investors in those deals, framing the central decision as whether value is entry-price insensitive (special companies) or entry-price dependent (normal businesses).

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One is good businesses are rarely cheap, and the good ones always end up being bigger and more valuable than you could ever envision. And I think a lot about people who went into Facebook At 550, people who went into Stripe at a billion, people who went into OpenAI at a billion. It turns out actually there's actually a non trivial amount of overlap between the people who are in those circles. And I think sometimes one of the hardest things to do in ventures to figure out is this a really special business that I should overpay for and not worry about entry price, or is this like a normal business where the amount of money I'm going to make is a function of my entry price?