The Quantified VC
Sep 5, 2018 · 2 min read

Hi Laci,

Thanks for your thoughtful comment! I appreciate your taking the time to read my post and share your experience.

You raised some really good points.

  1. Indeed, VCs’ investment logic is influenced by fund size and market conditions. There’s been a consistent pattern of VCs allocating capital into industries where most companies are likely to look good in the near term. Growing in high-growth segments is a lot easier than doing so in low-, no-, or negative-growth ones. In your described situation where you have an outsized fund compared to market opportunities and you are “forced” to invest within a certain timeframe, depending on your risk appetite, ambition, and choice of specialization vs. diversification, you could increase your fund portfolio allocation in top-performers (“put more money to work “) or spread across more startups (possibly at different stages) in high-growth industries. In VC, historically smaller funds have yielded better returns because they’re better aligned with the interests of their LPs and they are less reliant on blockbuster exits.
  2. All too often, I see many people studying the successes of others, but I rarely see anyone talking about their own failures or studying the failures of someone else. I think it’s more valuable to study someone’s flops than their success, because everyone succeeds differently, but everyone fails in very similar ways. If the road to success was paved, everyone would be successful, but it’s obviously not. I agree with you that there are a lot of lessons to be learned from those “losers.” There are even more to be learned from the choices you make when dealing with the fallout. The question is whether someone will be smart enough to use others’ mistakes to help themselves succeed — for VCs and founders. Thomas Edison once said, “I didn’t discover a way to create a light bulb, I discovered a thousand ways not to make one.”

The Quantified VC

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