15 Investing Lessons From Venture Capitalists

The series Investing Lessons from Venture Capitalists has gotten off to a great start. I have looked at a few great investors and found some great insights. Chris Sacca, Fred Wilson, & Howard Lindzon have all provided some brilliant insights by publicly talking about their investment thesis and strategies. Let’s briefly recap them here with a short tweet-able description…

5 Investing Lessons from Chris Sacca

Lesson #1 - The Team Matters

“Invest in teams you would spend a secluded weekend with.” - http://wp.me/pS3iU-kP (CC: @Sacca)

Lesson #2 – Support Systems Are Important

“Pay attention to who is supporting, advising, & guiding the business” - http://wp.me/pS3iU-kP (CC: @Sacca)

Lesson #3 – What Product

“No product – no business, poor product – poor business” - http://wp.me/pS3iU-kP (CC: @Sacca)

Lesson #4 – Customers Make The Difference

“Will someone actually pay real money for access to the idea?” - http://wp.me/pS3iU-kP (CC: @Sacca)

Lesson #5 – Money Matters

“Turning a profit in the market is ultimately a requirement” - http://wp.me/pS3iU-kP (CC: @Sacca)

 

5 Investing Lessons from Fred Wilson

Lesson #1 - Embrace Failure

“Failure forces introspection and humility” - http://wp.me/pS3iU-lv (CC: @avc)

Lesson #2 - Investigate Your Hunches

“Start-ups should be hunch-driven early on and data-driven as they scale.” - http://wp.me/pS3iU-lv (CC: @avc)

Lesson #3 - Look Out For Gate Keepers

“Examine industries and find the gate keepers – then run!” - http://wp.me/pS3iU-lv (CC: @avc)

Lesson #4 - The Team Matters

“If you wouldn’t work for the management, why would you invest in them?” - http://wp.me/pS3iU-lv (CC: @avc)

Lesson #5 - Experience What You Are Investing In

“Wonder how business really works, join a startup” - http://wp.me/pS3iU-lv (CC: @avc)

 

5 Investing Lessons from Howard Lindzon

Lesson #1 - Invest With The Sharks

“Investing with sharks is a cheap risk mitigation strategy” - http://wp.me/pS3iU-m5 (CC: @howardlindzon)

Lesson #2 - Play Games

“If you can’t build a good strategy in a game, what makes you think you can build an investment” - http://wp.me/pS3iU-m5 (CC: @howardlindzon)

Lesson #3 - Can Management Change With The Industry?

“If you don’t have a thesis behind the managers, why are you investing?” - http://wp.me/pS3iU-m5 (CC: @howardlindzon)

Lesson #4 - The CEO Doesn't Do Everything

“Invest in the CTO as much as the CEO” - http://wp.me/pS3iU-m5 (CC: @howardlindzon)

Lesson #5 - The Playing Field is Level

“What are these barriers to entry that you speak of?” - http://wp.me/pS3iU-m5 (CC: @howardlindzon)

Well technically Chris Sacca & Fred Wilson gave us some of the same insight. I think we are going to find that as we look at more Angel and VC investors that we can learn from. Since we didn’t really get to 15 as I promised, I’ll add one more. This one comes from Mike Moritz via Andrew Chen’s blog.

Lesson #15 – Look For Outliers In The Crowd

I rarely think about big themes. The business is like bird spotting. I don’t try to pick out the flock. Each one is different and I try to find an interestingly complicated bird in a flock rather than try to make an observation about an entire flock. For that reason, while other firms may avoid companies because they perceive a certain investment sector as being overplayed or already mature, Sequoia is “careful not to redline neighborhoods.

There’s a lot to be said for investing in the ugly duckling. When Don Valentine led Sequoia Capital’s investment in Cisco, many others had passed on the husband and wife founding team of Len Bosack and Sandy Lerner. Outliers should have the capability to either be a black swan or a white swan and all you have to do is determine which way they are going to go.

I have another Angel/VC that I am looking at for the next post - stay tuned for the next Investing Lessons from Venture Capitalists post...

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