This chapter explores the critical indicators and red flags in venture capital assessments, emphasizing the role of thorough data analysis and effective communication with founders. It highlights the importance of due diligence, background checks, and ongoing development for analysts to make informed investment decisions.
Let me introduce you to the four horsemen of the investment apocalypse:
Fear.
Greed.
Hope.
Ignorance.
Notice anything?
Three of four are emotions.
I’ve long argued that effective investing is far more about emotional control than technical know-how (although the latter certainly helps!) By hook or by crook, the best investors can find a way to tame their pesky emotional impulses and overcome that primal urge to respond impulsively to panic, passion, or pride.
My guest, the razor-sharp Ateet Ahluwalia, is a veteran trader and investor who has spent well over 15 years at the coalface, from trading at Goldman at the dawn of the financial crisis to his current role as founder and managing director of the venture capital firm Island Green Capital Management. As you’ll hear from our conversation, Ateet has built an insanely deep understanding of the emotional constitution required to succeed in finance and venture capital, which informs his approach to risk management, hiring, investing, due diligence, and everything in between.
I hope you enjoy our wide-ranging conversation, whose implications extend well beyond investing. For episode takeaways, a full transcript, and various other goodies, check out our Substack.
Important Links:
Show Notes:
- Why Venture Capitalists Should Shun the Glory
- “In a changing world, playing it safe is one of the riskiest things you can do."
- Risk: Why Size Matters
- The Emotional Constraints of Investing
- How to Find Out What Someone Really Wants
- The Purifying Power of Mistakes
- Pick up the Phone!
- Being Humbled by the Market
- Public vs Private Investing
- Why Hit Rates Matter
- Assessing the Macro Position
- Bullshitting, Question-Dodging, and Other Red Flags
- The Many Bosses of the Venture Capitalist
- Be a Painkiller
- Ateet as Emperor of the World
- MORE!
Books Mentioned:
- The Enlightenment Trilogy; by Jed McKenna
- Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist; by Brad Feld & Jason Mendelson
- Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean; by Karen Berman, Joe Knight & John Case
- Adventures of a Bystander; by Peter F. Drucker
