For VCs, “What Could Go Right” Is More Important Than “What Could Go Wrong”

You ever notice how when someone leads off by saying, “Now, I don’t mean to overgeneralize but…” they almost always are overgeneralizing? Now, I don’t mean to overgeneralize but I want to tell you about something that reporters and pundits frequently get wrong when evaluating the venture-worthiness of a failed startup. They focus on the answer to the question “what are all the things which could have gone wrong here” versus “how valuable would this company have been if things went right?”

  1. Under what assumptions or scenarios were the “venture scale outcome” dependent and how credible/achievable would that be given the degree of difficulty in execution.
  2. The firms which invested — do they typically invest in businesses with similar risk profiles and have they succeeded notably, or was the firm either stretching into a new area and/or hasn’t proved yet to be astute assessors of risk/reward.

You’ll find me @homebrew , Seed Stage Venture Fund w @satyap . Previously made products at YouTube, Google & SecondLife. Married to @cbarlerin .

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