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1/n
One of the hardest things in investing is attribution:
-what are the key decisions that drove investing returns? -what is skill vs what is luck?
In tech startups where high velocity is the law, attribution becomes even more complicated.
One of the hardest things in investing is attribution:
-what are the key decisions that drove investing returns? -what is skill vs what is luck?
In tech startups where high velocity is the law, attribution becomes even more complicated.
2/n
I’m lucky to have become an active angel investor in 2009-2014, walking into an epic vintage.
(Ironically, a key reason why I went "all in" on startup investing was that I was (wrongly) skeptical of public market valuations at that time)
I’m lucky to have become an active angel investor in 2009-2014, walking into an epic vintage.
(Ironically, a key reason why I went "all in" on startup investing was that I was (wrongly) skeptical of public market valuations at that time)
3/n
That vintage will go down as one of the best periods for returns In Tech history.
Particularly SaaS, where the market was remarkably fertile (similar upside to consumer, but competition less brutal).
That vintage will go down as one of the best periods for returns In Tech history.
Particularly SaaS, where the market was remarkably fertile (similar upside to consumer, but competition less brutal).
4/n
By 2012/2013, the upcoming SaaS wave should have been clear to anyone in the early stage ecosystem, yet there still were skeptics.
SaaS consumption was skyrocketing -- and the SaaS consumers were generally quite pleased with what they were getting.
By 2012/2013, the upcoming SaaS wave should have been clear to anyone in the early stage ecosystem, yet there still were skeptics.
SaaS consumption was skyrocketing -- and the SaaS consumers were generally quite pleased with what they were getting.
5/n
By 2015, the SaaS investing landscape had matured. It was clear that SaaS was ascendant and creating amazing startups.
3-4m pre seed valuations were becoming 6-8 or 8-10.
The volume of new software startups (and investors chasing them) was growing exponentially.
By 2015, the SaaS investing landscape had matured. It was clear that SaaS was ascendant and creating amazing startups.
3-4m pre seed valuations were becoming 6-8 or 8-10.
The volume of new software startups (and investors chasing them) was growing exponentially.
6/n
2015-2018 is still likely to be a good-to-great vintage, but less likely to produce 10x funds.
Also, a good chunk of the success in this vintage will be attributed to pandemic induced changes.
It will go down as a "live ball" investing period (particularly growth stage)
2015-2018 is still likely to be a good-to-great vintage, but less likely to produce 10x funds.
Also, a good chunk of the success in this vintage will be attributed to pandemic induced changes.
It will go down as a "live ball" investing period (particularly growth stage)
7/n
My comments aren't to take anything away from tech investors with great returns in the past cycle.
But it's human nature to overestimate one's picking ability in an especially fertile startup ecosystem.
My comments aren't to take anything away from tech investors with great returns in the past cycle.
But it's human nature to overestimate one's picking ability in an especially fertile startup ecosystem.
8/n
It's also easy to overestimate the importance of picking.
As good startup portfolios are dominated by big winners, it begs the question:
What are the traits of the winners and how do I invest in more of those?
It's also easy to overestimate the importance of picking.
As good startup portfolios are dominated by big winners, it begs the question:
What are the traits of the winners and how do I invest in more of those?
9/n
Yet the biggest decision driving returns might be something else.
What market to choose in which to build a portfolio?
Strong returns across a specific market suggest the key investing decision was choosing the right market.
Yet the biggest decision driving returns might be something else.
What market to choose in which to build a portfolio?
Strong returns across a specific market suggest the key investing decision was choosing the right market.
10/n
In 2009/2010, it was incredibly bold to do any high-risk investing, let alone software.
The most lucrative investing decision was, most likely, to lace 'em up and get in the early stage game.
Heck, outside of a few areas in the US, this game hardly even existed!
In 2009/2010, it was incredibly bold to do any high-risk investing, let alone software.
The most lucrative investing decision was, most likely, to lace 'em up and get in the early stage game.
Heck, outside of a few areas in the US, this game hardly even existed!
11/n
For some -- like me -- a big chunk of the "decision" was probably sheer luck.
Now, I wonder, in the cycle now starting, will the key decision again be picking the right market?
For some -- like me -- a big chunk of the "decision" was probably sheer luck.
Now, I wonder, in the cycle now starting, will the key decision again be picking the right market?
