Startup Mixology / Techcocktail in Chicago – Brad Feld and David Cohen

Brad and David, with typical Rockies cool, are here to talk about their new book, “Do More Faster” (buy it more this startup).  Brad and David embody early stage investing as it should be and it’s great to hear such an inspirational set of speakers.  For me, in venture for about 10 years now, guys like Brad are the reason why I joined the business and thought “investing can be done differently”.  Embracing ignorance, avoiding arrogance.

Opening: “You cannot sustain a long entrepreneurial arc when all you care about is your business.  I just don’t buy that.”  Brad talks from experience and his recollections of interaction with his wife as he is trying to maintain the impossible balance of life as a coast-to-coast VC sound incredibly close to home.  His wife Amy then happens to call and we all say “hi:”. 

Superangel is the next point of discussion.  SuperAngel, per Brad, essentially refers to “high velocity angel investing”.  He argues that after all the brouhaha about Angel / SuperAngel/ VC that the world will settle on Angel and VC (with Jeff Clavier et. al, being VCs, essentially MicroVC’s).  We can all agree to move on.

We have a little exchange where I posit that Superangels do matter in the sense that the embody or force a necessary change in a stratified VC industry.  In other words, kill the old demigods (who like the Greek gods of old forgot about their audience) and worship a new breed of investors, then burn them on the pyre and iterate.  Brad generally agrees with the statement but makes a good point: a light branding makeover will not modify the fundamental investment DNA of a firm, and most of the VC industry simply will not be able to make the shift. 

He uses a practical example of a (large and established) VC firm he has been speaking with who, suddenly, has a newfound passion for seed investing:

  • Brad: “How many seed deals will you do out of the new fund ?”
  • Mystery VC: “Oh, I dunno, 45 maybe, out of 60 investments in total.”
  • Brad: “Really ?  How many of the seed deals will you follow on ?”
  • Mystery VC: “Oh, I dunno, 15 I guess”
  • Brad: “Really, and do you tell the entrepreneurs that ?”
  • Mystery VC: “Hell no”.

As often I find myself with an argument I feel passionate about being played back to me: Amen.  I cannot tell you how annoyed I get at the unspoken reality that large VCs who run broad seed investment programs are only building funnels towards a few select A rounds, thereby condemning a large proportion of their portfolio to oblivion almost regardless of the quality of the opportunity (you’re either in the top 25% of you’re dead).  The stronger the brand, the worse the negative signaling effect, hence your strong asset (a Tier I investor) becomes an impossible liability.   

And remember, it is the VC’s job to drive reserves to those companies that really deserve it, and hence to force attrition on those that don’t.  Good portfolio managers must do that.

The rest of the discussion covers issues related to launching early and fast (including physical products), failing fast, how to raise money and so on which are best addressed by reading the book.

Anyway, awesome guys.  Something to aspire to.

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