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> leaving as soon as there are any signs of trouble. Spot on. When you have a portfolio approach to your investment thesis, there is almost no incentive to hel

by mbesto 9y ago

> leaving as soon as there are any signs of trouble. Spot on. When you have a portfolio approach to your investment thesis, there is almost no incentive to help your portfolio companies when times are bad. That being said, I genuinely do believe there is a subset of VCs (including USV) that will go beyond this and mentor startups past challenges.

JumpCrisscross 9y ago
> When you have a portfolio approach to your investment thesis, there is almost no incentive to help your portfolio companies when times are bad Instead of "portfolio" I think you mean "diversified" or even "scattershot". Such "spray and pray" types are too widely invested to devote meaningful time to their portfolio companies. (Notable exception: Y Combinator.) There's nothing wrong with this. They're taking a thematic approach and can be a good source of capital (and market intel). But they won't devote a partner to helping you pivot. In contrast, the "concentrated" player takes a few, deep bets. This is a more orthodox approach. You'll get more attention, including when you're down. You'll also get more when the investment is being considered. That means deeper due diligence and, in all likelihood, a stronger negotiation around terms. Knowing when to fold is also material. If a founder is intransigent, a savvy investor should know to cut their losses and hope for the best.
- mbesto 9y ago
  "Portfolio" is precisely what I meant. Given it appears you have a background in PE, perhaps the term is more aligned to PE/VC investors in the UK (where much of my M&A experience originated from). VC models aren't necessarily diversified, because diversity implies variance in type, not necessarily in volume, which the latter driving the lack of incentives for VC investors - they simply don't have the time. Nevertheless, I think we're saying the same things - just different terminology (which certainly is prevalent in finance).
- rdlecler1 9y ago
  In what way does YC provide long term support? They literally hundreds and hundreds of alumni, how did they scale themselves?
  - Judgmentality 9y ago
    YC does provide support to companies after they graduate, but it is limited. I heard from an alum that after you graduate you're only entitled to 1 hour of face time a year. They really rely on their companies to help each other, but it doesn't work that great in practice based on anecdotes I've heard.

by mbesto 9y ago

JumpCrisscross 9y ago

> When you have a portfolio approach to your investment thesis, there is almost no incentive to help your portfolio companies when times are bad Instead of "portfolio" I think you mean "diversified" or even "scattershot". Such "spray and pray" types are too widely invested to devote meaningful time to their portfolio companies. (Notable exception: Y Combinator.) There's nothing wrong with this. They're taking a thematic approach and can be a good source of capital (and market intel). But they won't devote a partner to helping you pivot. In contrast, the "concentrated" player takes a few, deep bets. This is a more orthodox approach. You'll get more attention, including when you're down. You'll also get more when the investment is being considered. That means deeper due diligence and, in all likelihood, a stronger negotiation around terms. Knowing when to fold is also material. If a founder is intransigent, a savvy investor should know to cut their losses and hope for the best.

mbesto 9y ago
"Portfolio" is precisely what I meant. Given it appears you have a background in PE, perhaps the term is more aligned to PE/VC investors in the UK (where much of my M&A experience originated from). VC models aren't necessarily diversified, because diversity implies variance in type, not necessarily in volume, which the latter driving the lack of incentives for VC investors - they simply don't have the time. Nevertheless, I think we're saying the same things - just different terminology (which certainly is prevalent in finance).
rdlecler1 9y ago
In what way does YC provide long term support? They literally hundreds and hundreds of alumni, how did they scale themselves?
- Judgmentality 9y ago
  YC does provide support to companies after they graduate, but it is limited. I heard from an alum that after you graduate you're only entitled to 1 hour of face time a year. They really rely on their companies to help each other, but it doesn't work that great in practice based on anecdotes I've heard.