One of the most famous VC firms of all time is undoubtedly Sequoia Capital.
So insanely successful has Sequoia been at partnering with great technology firms, that some estimate their firm has backed over 25% of the NASDAQ as we know it to day (an insane stat!).
Yet what few people know is that one oft the fund's first investments was in Apple... and they ultimately sold out of the company prior to IPO to service their investors tax bills.
This taught Sequoia founder Don Valentine two very important things; get tax exempt VC investors so they can hold for the long term and let your winners run if you are on to a good thing
That second adage, whilst easier said than done, is certainly something we can all relate to. Whether it be the story of Roy Raymond (founder of Victoria Secret) or something a little closer to home like the shares you regret selling - having the know-how to let your winners run is a great life lesson.
I think the easiest way to achieve this enviable goal of letting your winners run is very simple. Generally, the best way to avoid these unfortunate mistakes is
Never needing to sell because of debt or otherwise
Being truthful about how much faith you have in the company/venture
Outlining what return you are really getting out of your alternative
Whilst each individual investment is different and it is often harder to have faith in something if you do not directly control it (e.g. buying shares) the best way framework is to ask yourself... can I avoid selling and if I do sell, what kind of growth am I going to get out of an alternative.
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