An economist friend recently challenge me over lunch.
“Seed investing is changing. What would this market look like if you boiled it down to Econ 101?” he asked. “And who are going to be the winners and losers?”
Having thought about it since, I believe that the market for making seed investments remains very attractive. This piece explores it from an economist's perspective.
Venture capital does great things for the United States. But a good society requires more than just a robust economy. It demands fairness and morality. If the venture community does not do more, we will soon be mentioned in the same dismissive breath as Wall Street.
Venture investors are well-positioned to do more good. It's time we start.
Compounding growth is powerful. A company growing at 15% monthly over four years will be 8x larger than one growing at 10%.
It's an amazing difference. It drives the gap between the iconic companies that break out and those that muddle along toward mediocrity.
I compiled data on some of the most successful companies in venture history to put some measure around this.
There is a bit of wisdom that well-established venture funds are the best place to train new investors. That is, that venture is an apprenticeship business. And the corollary of this wisdom is that the good new funds are spin-outs from existing funds.
The thing is, neither is true for seed-stage venture.
Hot trends generate their own energy. And that’s what excites me about my recent investment in Skyfit—an on-demand app for exercise.
Samir and I wrote recently about the impact of seed funds in securing follow-on financing. This post adds detail and perspective for seed-stage focused General and Limited Partners.
We created League Tables that identify seed funds with the top follow-on rates each year. We believe that follow-on rates are a core metric and critical to understand a young fund’s performance.
Founders should pick investors that not only help the company reach critical milestones, but will help them secure their next round. Follow-on rate is strong evidence that an investor can help a company secure downstream financing.
Samir Kaji and I analyze follow-on rate data and present the top investors here.
It is time to celebrate some portfolio companies! These four startups have all announced new rounds in the last few months. And they deserve a lot of credit for their success.
Last year I launched an experiment. I started a small venture fund. I wanted to make great investments, work with great entrepreneurs, and explore some specific hypotheses around finding great companies.
Today I’d like to introduce Switch VC.
Hiring is broken. And the reason is simple: Traditional interviews don’t work. Most companies hire the wrong people and take a long time to do it.
Today Mode announces its Series A. It’s a big, well-deserved moment for the team. I am happy to join as a returning investor. They are building a great product that data analysts simply love.
Talent is important. Does this team have the smarts, skills, and drive to pull off something big? My latest investment in the SOLOpro team is a clear yes across the board.
We need principles in our crafts. They give us direction and define our style. In the craft of venture investing, my first principle is this: Bet on the most talented founders I can find. Of course I have to balance fast growth, large markets, best-in-class products—all critical factors. In the end though, talent is my lodestone.
Nothing is more exciting than founders taking on large and outmoded industries. And there are few industries larger or more outmoded than insurance. For me, investing again in PolicyGenius is a no-brainer. I've been involved with the team from the beginning. It's clear they figured out something big and that they are the team to take it on.
We scribble notes on an already crowded whiteboard, surrounded by the buzz and hustle of one of San Francisco's popular co-working spaces. Across from me is the head of marketing for one of the startups I first invested in as an angel. The founder had asked me to weigh in on their first major product launch plan, and there was an opportunity to collaborate on a strong, cohesive message that would tie it all together.
We recently made two more investments in startups changing the way we work—Do and SketchDeck. I am excited to be a part of the future they are creating.
Things have been busy and exciting—venture events, speaking engagements, the occasional party, and a lot of coffee meetings. I met with oodles of cool startups and founders, and between it all made an exciting investment in BrightFunnel. I am positively thrilled about them joining the portfolio.
I am excited that last week I invested in Mattermark, a fast-growing analytics company with great Silicon Valley traction and plans to expand far beyond. They have established great rapport with the venture community already. Danielle Morrill, their CEO, has a vision for the future of analytics that is very similar to mine. That alignment combined with great initial execution made investing an easy choice.
I recently invested in two data companies. Both are exciting startups with potential to transform huge industries, led by strong teams who understand their markets.
It’s 3 a.m. and my phone vibrates. “This can’t be good,” I think, rolling over to read the one text message I never wanted to see: the AppDirect platform is down. No one has been able to use our partners’ applications for hours. And if we don’t fix it now, tens of thousands more will be locked out by morning.