LPs Beware: The “Super Power Law” in Venture Capital
Every few months, a debate resurfaces on social media: Is the Venture Capital power law a bug or a feature of the asset class? This question often overlooks a deeper…
Mindset-Based Investing
25 posts
A Manifesto For Mindset-Based Investing
Mindset-Based Investing is a new approach to select emerging VC managers based on their personality traits and approach to risk vs. track record and other usual metrics. Apply now to…
The Most Underrated VC Due Diligence Item: How Founders Learn
Why do so many Founders make the same mistakes, costing Investors substantial capital? My previous explanations—overconfidence and fear of failure—capture part of the problem. There’s a third factor that VCs…
Are Entrepreneurs Delusional? The Overconfidence Factor in Startup Success
One of the most consistent personality traits I’ve observed in entrepreneurs over the years is a tendency to live in denial. They don’t seem to perceive the inherent risks of…
How The Legendary VC Arthur Rock Evaluated Startup Founders
Arthur Rock’s name is tied to early Silicon Valley, that’s why he thrones among our collection of VC quotes. A decade before Don Valentine founded Sequoia Capital and Eugene Kleiner…
Is Money The Main Driver of Successful Entrepreneurs?
I recently attended meetings where experienced VCs and Founders claimed that money is the primary driver of successful entrepreneurs. This idea stood out because it conflicted with much of what…
How ChatGPT Can Help Venture Capitalists Make Better Investment Decisions
I recently attended a talk by MIT professor David Rand, a leading researcher on misinformation and the psychology of belief. Rand’s findings challenged my assumptions about confirmation bias—a concept I’ve…
Speed vs. Perfection: How Top Entrepreneurs Dominate Winner-Takes-All Markets
Operating with diligence is often a decisive factor in startups’ successes. In some industries, the first to market wins. In others, it’s the company that innovates most consistently or serves…
Bridge Financing: When Venture Capitalists Throw Good Money After Bad
Deciding to reinvest in a company amid uncertainties is one of the most challenging choices Venture Capitalists face. One question always arises whether they are considering extending bridge financing to…
How The Best LPs Evaluate Emerging VC Fund Managers
Despite bumps on the road, Venture Capital has become an attractive asset class for Investors and operators, promising cherry-on-top returns and access to what will happen next. More VC funds…
Resilience Matters More Than Grit In Entrepreneurs’ Success
Entrepreneurial success often depends on having the right combination of personality and abilities. Among these, grit—the combination of persistence and passion toward long-term goals—has been hailed as a must-have trait,…
The 7 Secret Evaluation Criteria Venture Capitalists Use To Make Investment Decisions
Venture Capitalists are vocal about what they look for in startups they invest in: stellar team, large market, scalability, exit routes, etc. What about the evaluation criteria they don’t discuss but critically…
Should Investment Decisions Rely on Intuition or Data?
Early-stage Investors seem to rely on little else than their gut to make multi-million dollar bets on fledgling startups—and their Founders. How do the best VCs mix their intuition and…
How Venture Capitalists Evaluate Successful Startup Founders
Venture Capitalists always stress that their most important investment criterion is the quality of the startup’s Founding team. What are the characteristics and personality traits Investors are looking for? More…
“I don’t look for companies. I look for Founders.” – Masayoshi Son
Softbank’s Masayoshi Son has been credited with the largest win (Alibaba) and loss (WeWork) in Venture Capital’s history. As he’s commonly referred to, “Masa” is reported to be a very…
28 Questions VCs Ask Founders Before Investing
Venture Capitalists receive hundreds of investment opportunities annually, making performing quick and effective exploratory due diligence crucial. They need to identify promising startups while swiftly avoiding potential pitfalls. However, data…
Understanding the Power Law: Do Venture Capitalists Take Enough Risks?
Once seen as mavericks making crazy bets shoulder-to-shoulder with the entrepreneurs they backed, Venture Capitalists are increasingly railed for focusing more on the “Capital” part of the job (managing money)…
Juicero: How Founder Charisma and VC Projection Bias Led to a $120 Million Failure
In the annals of Silicon Valley’s storied history of booms and busts, the tale of Juicero stands out not merely as a business case gone awry but as a psychological…
SBF, Holmes, Madoff: How They Fooled Investors
Prosecutors working in the case against Sam Bankman-Fried (SBF), the embattled crypto magnate accused of siphoning billions of dollars from users of his crypto exchange FTX, are intent on demonstrating…
“Investors tend to have a herd mentality.” – Jessica Livingston
Venture Capitalists come across thousands of business ideas every year. But how do they make their investment decisions? Do cognitive biases influence them, or is there something more systematic present?…