After Investing $100 Million Into New VC Firms, Here’s What I Look For: Traditional But Better, or Different & Excellent.
Screendoor has now looked at more than 1,500 venture firms raising funds, backing roughly 1.5% of them, often as their first or second largest investor. When I’m scanning a pitch deck I’m basically looking to put it into one of two buckets — Traditional or Different.
“ Traditional But Better” means they are basically running a playbook which doesn’t appear too different from existing firms — sourcing companies in categories considered ‘venture scale,’ with a portfolio model that has consistent stage and ownership targets, and ‘value add’ that mirrors the language other firms might use. Of course Screendoor has an eye towards new VCs with identities, backgrounds and networks which are ADDITIVE to the venture ecosystem to better serve founders, so while the structure of the playbook is duplicative, the people running the playbook aren’t — and that’s the key. In these cases we’re asking ourselves, can this individual/partnership execute a ‘known’ playbook better than incumbents, because it’s not very interesting to put people in business who are going to be Traditional But Average. Mediocre VCs get wealthy themselves but they won’t make money for their LPs, and are, at best, just a WITHDRAWALS ATM for average startups.
“ Different & Excellent “ equates to something that doesn’t exactly look like other VCs. Could be pinning their thesis on a category of technology or type of founder that isn’t yet understood by the investment community. Or contrarian in the number of companies and/or dollars invested per company compared to their peers. Maybe even a strong POV on what value they can add that isn’t typically available to early stage founders. These firms aren’t carbon copies of anything else out there. In fact, they probably aren’t generally replicable. But they take advantage of their unique founding partners, very often the type of people who would reject — or not get hired by — ‘traditional VCs.’ Here we have to torture the models to really understand the quantitative sensitivities around expected performance. And how quickly the firm can process new information and adjust if portions of their hypothesis need tuning once in market. But we’re interested in taking this risk when the person and opportunity warrants it.
If you’re a VC raising your first fund, and you think you fit either of these descriptions, please let us know. I could even ask you directly which one of these you think you are and why.
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Originally published at https://hunterwalk.com on March 4, 2025.
