Lots of ink is spilled parsing differences b/w pre-seed vs seed vs early stage (etc…) investing. But some truths hold across all stages of venture investing! @alexiskold digs in here: startuphacks.vc/blog/7-truths-… #OpenLP
Truth 1. Venture outcomes are driven by a power law.
Power law is an immutable law of the universe, and that extends to #VC too. Most startups fail, but the biggest winners, when they happen, tend to be huge.
VC’s NEED 🦄’s (and decacorns!) to succeed.
Power law is an immutable law of the universe, and that extends to #VC too. Most startups fail, but the biggest winners, when they happen, tend to be huge.
VC’s NEED 🦄’s (and decacorns!) to succeed.
Truth 2. Your Fund Size is Your Strategy
A fund's portfolio construction will depend on how much capital is under management.
This is why funds often specialize at a specific stage of investing (ie. <$50M fund = pre-seed/seed, $150-$300M fund = seed/series A, etc...).
A fund's portfolio construction will depend on how much capital is under management.
This is why funds often specialize at a specific stage of investing (ie. <$50M fund = pre-seed/seed, $150-$300M fund = seed/series A, etc...).
Truth 3. Ownership matters
The race b/n ownership dilution and valuation growth is a complex calculus. If you can't get into all of the best deals w/ a smaller check, you need to think really hard about ownership.
Here’s the #LP perspective:
The race b/n ownership dilution and valuation growth is a complex calculus. If you can't get into all of the best deals w/ a smaller check, you need to think really hard about ownership.
Here’s the #LP perspective:
https://twitter.com/Beezer232/status/1364966969443819527
Truth 4. Venture Business is Hard to Learn
You learn venture by doing — actually investing. The problem: This is an expensive form of learning.
Alternative routes exist: be an angel investor, be a founder w/ a big exit, go to a small, pre-seed fund. But all have tradeoffs.
You learn venture by doing — actually investing. The problem: This is an expensive form of learning.
Alternative routes exist: be an angel investor, be a founder w/ a big exit, go to a small, pre-seed fund. But all have tradeoffs.
Truth 5. Venture Firms are Hard to Scale
#VC is no different from any other business — it takes time to build trust and a good working relationship.
Aligning around a common thesis and methodology for investing is key to smooth out the wrinkles.
#VC is no different from any other business — it takes time to build trust and a good working relationship.
Aligning around a common thesis and methodology for investing is key to smooth out the wrinkles.
Truth 6. You are as good as your deal flow
You cannot invest in deals you don't see.
Your network is critical — even when you have a great firm brand, you will still lean on your network.
You cannot invest in deals you don't see.
Your network is critical — even when you have a great firm brand, you will still lean on your network.
Truth 7. Time management is everything
Very few people appreciate just how difficult this job is. The longer you are in venture, the bigger your portfolio is, and the smarter you need to be about self-care and calendaring.
Very few people appreciate just how difficult this job is. The longer you are in venture, the bigger your portfolio is, and the smarter you need to be about self-care and calendaring.
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