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My understanding of the Chris Dixon + Venture Hacks argument is: VC participation in a seed round means that they have a deeper understanding of the company tha
by bravura 17y ago
My understanding of the Chris Dixon + Venture Hacks argument is: VC participation in a seed round means that they have a deeper understanding of the company than if they merely see a deal and pass on it. This implied deeper understanding gives them greater leverage in controlling the terms of a future financing.
So Sequoia passing on a deal doesn't deter other VCs because they might just say: "Well, Sequoia might not have given this deal enough scrutiny to see the value." But if Sequoia is already a seed investor, it is more difficult for other VCs to convince themselves of that.
Please correct me if I'm wrong here.
- deleted 17y ago[deleted]
- pg 17y agoSequoia doesn't participate in the seed rounds in this case. They have the same relationships to the startups we fund that Sequoia LPs have to startups they fund. They're entitled to a percentage of our returns, but they don't pick the companies or own stock in them. Also, within the industry the phrase "passing on a deal" does not mean anything as casual as it sounds. It implies that an investor has scrutinized it fairly closely and made a conscious decision not to invest.
- samhogg 17y agoFounders who can't take a "pass" and investors who can't stomach investing in one will not make it long term anyways. Those are just egos talking. Great teams will breed success and Sequoia is another great team to add to the YC concept.