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This was my initial thought too but it is tempered by the "deals we passed on" meme that is prevalent in VC circles. A VCs perception of the best companies is n
by rorykoehler 6y ago
This was my initial thought too but it is tempered by the "deals we passed on" meme that is prevalent in VC circles. A VCs perception of the best companies is not based on reality. Like a gambler a VC has no idea whether their bet is the right one until much later. Sure you can de-risk it based on previous exits of founder etc but the reality is every VC probably passes on more great companies than they invest in.
- lpolovets 6y agoAgreed that VCs pass on way more good companies than they invest in. But if a VC invests in .5% of companies they look at, and there are 3 great companies in that .5% and 15 great companies in the other 99.5%, that suggests the VC's ranking is pretty good on a relative basis.
- rorykoehler 6y agoIt's impossible to know as getting VC investment increases the odds of success or at least surviving to the point where you can even attempt to have a go. Clearly some are better than others at choosing winners. Part of me thinks that this could be driven by network more than competence though.