Nov 20, 2014

Looking More Closely

I was talking when I should have been listening 

- Grant Hart

As venture investors, we look at our investments and investment strategy continuously at a macro level. Questions like: how much are we investing and how fast? How does that compare to our other funds? What are our ownership levels and how are those changing? 

We run Monte Carlo simulations regularly to analyze the future capital requirements of companies, and whether we have reserved enough capital to support them in the out years. We look at the geographical distribution of our investments. We try to correlate all these data points to our investment thesis

It's constant self-analysis, and it is part of how a VC fund should operate.

But I find it's also helpful to sometimes zoom in closely, almost microscopically, at the companies themselves. To forget about portfolio diversity (or even returns), or the ups and downs they go through, and remind myself of what it is they do at a discrete level, and why they use the Internet to do that. 

So after our weekly meeting on Monday I poked around the USV portfolio a bit. I learned about:

* The 100+ pages of poetry on Wattpad, many with tens of thousands of reads and thousands of comments. This writer invents poetry forms too. People like poetry, apparently.

* The (more than) than 7,000 Etsy results for "magic wand" - there are some incredible, handmade, wands for sale there.

* The Black&Sexy network of videos and films and programming over on VHX - "programming focused on a young, progressive, Black audience who seek a truer reflection of their modern culture." This group makes short videos and sells them for between $2 and $5 and also gives them away for free on Youtube. They have sold tens of thousands of these Internet-only shows.

* I found this fundraiser on Crowdrise that supports an organization that teaches Filipino folk dance to Filipino-American youth in Stockton, CA. Micro-support ftw.

* This small fashion accessories company in London borrowed $100k from over 1,000 people via the lending platform on Funding Circle.

* A guy on Skillshare who uses his 100 year old family recipe to teach you how to brine.  

* And, Liz from Seattle started a new career at age 55 after learning how to code for free on Codecademy.

These surely are not necessarily signs of ultimate start-up success (though I might argue they are directional indicators of such). 

But it makes things more meaningful for me to dig a little deeper sometimes to see what is really going on. It keeps me optimistic, and optimism may be a core competency of a venture investor, after all.


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