15 more things I learned in my second year as an early-stage investor

Photo by Alessandro Bianchi on Unsplash

Here are 15 more things I learned in my second year as an early-stage investor, based on my observations of startups, investments, and venture capitalists.

As a reminder, my opinions are my own and not the views of my employer.

1. If you’re an early-stage investor, jumping at any opportunity to increase the graduation rates of your seed investments might make Series A investors question your trustworthiness and leave founders feeling uneasy. Before rushing to elevate the valuation of a pre-revenue, pre-launch generative AI startup, think about the potential implications for the startup’s journey.
2. In hunting for deals, over-indexing on signals is lazy, but completely disregarding all analytics is irresponsible. Know when to index which markers.
3. Similar to how private equity investors look for undervalued public companies at a discount, early-stage investors can try to secure undervalued startups at what they perceive to be a discounted rate, taking into account future market outlook projections. Investing in pre-seed enterprise deals that have the potential to evolve into suite solutions later can be one such strategic approach.
4. Thesis-driven investors can be principled but rigid. Opportunistic investors can be realistic but ruthless. But if you find an investor who is principled and ruthless or realistic and rigid, that’s the sweet spot where meaningful returns, however you define them, tend to happen.
5. Talking nonsense with classical music playing in the background doesn’t make you a thought leader.
6. Funds, startups, and people in this industry overwhelmingly run on a narrative. Check your sources before you take any information at face value.
7. You should really build an internal CRM if you haven’t done so already.
8. After many years in VC, simply saying “I don’t like it” should be a valid enough reason to pass on a prospect. Trying to force a half-hearted reason to justify your gut feeling, like citing small traction, can lead to unnecessary confusion for both you and the founder. Normalize trusting your gut. Founders are better off having strong supporters on their cap table instead of trying to convince a VC who isn’t excited about their vision.
9. In the venture capital game, the longer you’re in it, the more you notice certain deals seem tailor-made for specific funds—"This is a Sequoia deal” or “This is an Andreessen deal.” The VC game gets interesting when you find those VCs or funds that don’t fit neatly into categories. Not every unpredictable VC is a winner, but a lot of the successful ones are the ones who consistently invest in ways that defy expectations.
10. We should never underestimate the First World’s willingness to spend on convenience.
11. Money management and coaching businesses are the new neobanks—there are too many of them with very little credibility.
12. The web skews free. The capitalization of the net is as bad as it sounds, no matter what words are used to mask it (ownership, paid community, sovereignty, DAO, etc.).
13. I’ve never seen a nonprofit build a for-profit business that scaled with a service they already provided as a nonprofit.
14. For a founder juggling limited time and resources, the most useful event to attend might be a free webinar that outlines various funding models beyond venture capital. Most fireside chats, conventions, summits, and panels are not a good use of time.
15. In the clash between truth and perception, perception tends to score short-term victories. However, it’s the truth, upheld through a consistent reputation, that prevails in the long run. If you’re aiming for longevity in this industry, focus on building and maintaining a rock-solid reputation.

To check out my learnings from my first year, view them here. Feel free to visit my website at https://www.ayaspencer.com to learn more about my work.