Picking Winners: A Framework for Venture Capital Investment

Re:Picking Winners: A Framework for Venture Capital Investment by startupdiscuss on Sunday June 25, 2017 @10:01PM (#14633496)

This analysis is a little too "content free" for my tastes. (Edit: I don't mean there is nothing to it, I mean the analysis is largely formal as opposed to the content of the decision)

But this problem hasn't gone unnoticed and there are some ideas around how to solve the "pick the rare winners" problem:

1. Andreessen: Don't pick winners. Invest in the startup after it has already demonstrated itself to be a winner but before it goes public. This is the safe growing area.

2. McClure: Invest small amounts, early so that you can afford to spread the investment over many companies.

3. Thiel, Gurley: Be right

4. Graham: combination of #2 and #3

5. Doerr: Network like crazy to have a shot of being in the few good ones (this assumes you will recognize them)

#3 is not necessarily something we can reproduce

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Re:Picking Winners: A Framework for Venture Capital Investment by pge on Monday June 26, 2017 @10:16AM (#14636950)

5 is the often overlooked one. The quality of the opportunities that at one sees is a huge driver of ultimate returns. Two equally skilled VCs with differing quality deal flow are going to have different returns. So brand and networking are material drivers of return.

I would argue that that applies to more of the names you reference than just Doerr. For example, the early success of YC with dropbox helped drive better deal flow for future deals.

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Re:Picking Winners: A Framework for Venture Capital Investment by startupdiscuss on Monday June 26, 2017 @12:01PM (#14637786)

That is an excellent point (that many investors rely on increased deal flow from early success). It sort of pervades the other "styles"

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