Leonardo da Vinci and Venture Capital

How we can learn about investing from the Renaissance master.

“The noblest pleasure is the joy of understanding”- Leonard Da Vinci

Da Vinci is perhaps the best-known artist in the world because of his famous painting, the Mona Lisa that hangs in the Louvre. But there is much more to Da Vinci than this iconic portrait. Born in 1452 Da Vinci is the quintessential Renaissance man with a curiosity and insatiable hunger for knowledge and discovery. While we have only 15 works of art by Da Vinci, we have over 13,000 pages of drawings and notes that were preparation for his works. He believed through practice and repetition one could achieve mastery. Throughout his life, Leonardo da Vinci avoided the pursuit of vanity and celebrity. He was an introvert with an obsession for understanding the world and humanity around him, an independent, intellectual mind that philosophized on subjects from vegetarianism to the meaning of life, and an inventor that conceptualized flying machines, concentrated solar power, and an adding machine among many others.

To paint the human body accurately, Da Vinci did many sketches of anatomy to truly understand how the human body worked. Above is a page from his notebook. Notes are in mirror writing, written right to left.

Leonardo Da Vinci may not be the first person that comes to mind when one thinks of venture capital, but Da Vinci’s approach to art and life is one that venture investors can learn from.

Many early stage venture investors will proclaim early stage start-up investing is less of a science and more of an art. If a seed stage investor is an artist — they should aim to master the craft in the way of Da Vinci — focusing on achieving accuracy and as acute an understanding of the subject as possible.

Among the quotes from Da Vinci, the following stand out and include my notes and interpretation when applied to venture investing. I acknowledge that Da Vinci wrote these notes without venture investing in mind, but rather as philosophy on life. What I’ve found is that many times good life philosophy can be reflected as good advice in venture investing.

· “ Having wandered some distance among gloomy rocks, I came to the entrance of a great cavern … Two contrary emotions arose in me: fear and desire — fear of the threatening dark cavern, desire to see whether there were any marvelous things in it.” Venture capitalists face two risks that they oscillate between — the risk of missing out and the risk of losing money. The risk of missing out is interpreting the cavern as full of marvelous things. Many people, over time, overestimating that the cavern is “full of marvelous things” drive bubbles. On the opposing side, the risk of losing money is embodied in interpreting the cavern as dark and threatening. Many people, over time, overestimating that the cavern is dark and threatening cave drive recessions, and, ultimately, missing out on the big wins necessary to drive venture returns.

· “If you find from your own experience that something is a fact and it contradicts what some authority has written down, then you must abandon the authority and base your reasoning on your own findings.” When conducting due diligence one should test one’s assumptions and change them when the findings suggest the assumption is incorrect.

· “There are three classes of people: those who see. Those who see when they are shown. Those who do not see.” The skilled investor. The average investor. The fool in the market.

· “It is an acknowledged fact that we perceive errors in the work of others more readily than in our own.” It is easier for venture firms to point out another firm’s mistakes than to realize their own — however, the real value lies in realizing and rectifying their own mistakes rather than throwing the stone.

· The greatest deception men suffer is from their own opinions:” Great investors understand the fallibility of their opinions. To avoid deception, we must understand the biases that tamper with the opinions that drive our investment logic.