See Versatile VC’s investment criteria.
Macro themes
- Human knowledge compounds; we build new things on the shoulders of giants at a faster and faster pace. See the Law of Accelerating Returns: the rate of change of progress keeps accelerating, because humans can use the technology at their disposal to progress faster than previous generations could without the technology
- More and more high potential people are becoming founders, because of lack of traditional job opportunities; far better education around founding companies; and the no-code movement.
- Trusted business relationships are far more valuable than relationships with people with whom you don’t have a history, particularly in an era of social distancing.
VC firm management
- Better process creates better results for investors. I cannot promise limited partners performance alpha, but I can promise process alpha.
- If tech investors eat their own dog food, and use technology and analytics in their investment process, they’ll get better results. In the liquid markets, firms like DE Shaw and Two Sigma have rethought investing by using technology and data to inform their decision-making. In the private markets, few investors are yet doing this. See Venture capitalists eating our own dog food: Using technology and analytics to make better investments.
- Alternative VC (e.g., Flexible VC; Revenue-based investing) is a better fit than traditional equity venture capital for many early-stage companies.
- If you invest in diverse women and founders from non-traditional backgrounds, you will get better returns. An investors’ job is to invest in what others overlook.
Industries
I am particularly interested in two sectors:
- Fintech. Investment management offers unusually high margins and unusually dissatisfied clients; that’s a recipe for VCs to turn analog dollars into digital dimes. See Asset Managers, Prepare to Have Your Business Disrupted and Artificial intelligence in financial services.
- Salestech. Sales today is still one of the most manual, inefficient processes in business. See How to Make Sales as Easy as Online Dating. People are much faster to use new technology in the search for romance than they are in business, which means you can see the future of business relationships by analyzing online dating.
