2 min read

Uncovering Venture Capital with Stanford GSB Professor, Ilya Strebulaev

"Talent of entrepreneurs is by far the most important factor when VCs make decisions whether to invest or not"

Other valuable insights from the session:

"Venture capital is all about betting on very risky innovative companies and venture capitalists very often don't really know when they invest for the first time, whether the company is going to be successful or not."

"The most important quality both for people and companies of the next foreseeable future is flexibility. You have to think about how to be flexible and to evolve together with your industry or with your skills."
"In healthcare, venture capitalists assess startups differently than when they assess software companies. They believe more in the product and the business model rather than the rider and the jockey, so they bet more on the horse."

Watch the full session here.

Higher valuations mean greater expectations. You might want to raise for a longer runway, as long as 36 months, but most investors are still evaluating you on a 12-month timeline upon financing round. Can you reach your next milestones (i.e. 10x your KPIs) in a year from now? Higher valuations mean your investor thinks you are more likely and can more quickly capture your TAM at scale than your peers.

Retention falls when expectation don’t meet reality. So, either fix the marketing/positioning of the product or change the product. The former is easier to change than the latter.

As founder, you only need to be good at 3 things: raise money, make money, and hire people to make money. Every investor, when going back to the fundamentals, will evaluate you on these 3 things.