You are an entrepreneur whose business requires $10 million in investment. A venture capital organization undertakes due diligence and offers to provide the funds in exchange for 50% ownership of the company. From discussion, you learn that the venture fund believes your company will be maturing in three years. You also learn that the fund typically applies a 40% expected return to its venture investment analyses.
You agree that $10 million is required. You think that the venture fund has correctly estimated the future value of your company, but that it will take 5 years rather than 3 years to get there. You also think there is less risk, so you think a 30% return target is more appropriate.
What should you do?