Despite the hardships this year has brought, there is much to be thankful for. One thing we’re grateful for is all of you, our amazing community of investors and founders.
As a small thank you, we have compiled a list of investing wisdom, from some of the best VCs and angel investors on the planet. Enjoy!
Naval Ravikant on investment sizing
Naval Ravikant is the founder of AngelList, and an investor in numerous successful startups, including Uber and Twitter. He is also an advisor to Republic.
“Always try to get your standard bite-size. If you put a lot of money into a few deals and little money into many others, you’ll find that your winners tend to come disproportionately out of the deals with little money invested. And that will hurt your portfolio return.
Once you have conviction, always try to get your standard bite into that deal.”
Chris Dixon on how disruptive tech is often dismissed as a “toy” at first
Chris Dixon is a partner at Andreessen Horowitz, and he has invested in numerous successful tech companies, including Oculus VR, Coinbase, and others.
“Disruptive technologies are dismissed as toys because when they are first launched they ‘undershoot’ user needs. The first telephone could only carry voices a mile or two. The leading telco of the time, Western Union, passed on acquiring the phone because they didn’t see how it could possibly be useful to businesses and railroads – their primary customers.
What they failed to anticipate was how rapidly telephone technology and infrastructure would improve (technology adoption is usually non-linear due to so-called complementary network effects).
...This does not mean every product that looks like a toy will turn out to be the next big thing.”
Fred Wilson on the importance of diversification
Fred Wilson is a co-founder of Union Square Ventures, and his firm’s investments include Etsy, Twitter, Carta, and many more.
“Investing in startups is risky. If you make just one investment, you are likely going to lose everything. If you make two, you are still likely to lose money. If you make five, you might get all your money back across all five investments. If you make ten, you might start making money on the aggregate set of investments…
So you need to make enough investments to be confident that you will get at least one big winner. And so that means making enough bets.”
Jenny Lee lists the trends her firm is watching closely
Jenny Lee is the founder and a managing partner at GGV Capital, a Singapore based VC firm. Jenny led some of the firm’s most successful investments, and is regularly ranked on Forbes’ Midas List of the top venture capitalists.
“Trends we are excited about include
Startups leveraging AI and machine learning algorithms to model and personalize large datasets in verticals like education, finance, healthcare, business processes, retail/e-commerce
Startups leveraging data online to deliver better services offline– more integrated online and offline services, particularly in the retail storefront areas
Startups with cross-border models, leveraging learnings from one region expanding to the next, eg, Exporting successful business models from China to Southeast Asia, from the US to South America or Europe
Last but not least, new disruptive products and services made possible by computer vision, robotics automation and integration of machines with a human – the sci-fi stuff.”
Naval Ravikant on the ‘Peter Thiel rule’
“When a company’s valuation climbs rapidly between rounds, that should attract you, rather than scare you off, because humans are bad at calculating nonlinearities. That’s true as long as a credible or top-tier investor leads the round.
When you see a company’s valuation go up 5x in nine months, you might automatically think it’s overpriced. But that’s because your brain can’t handle the fact that a company might actually grow 10x in nine months.”