The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Index's Danny Rimer on Investing Lessons from Hits like Figma, Discord and Etsy to Missing Snapchat, Airbnb, Facebook & Spotify | Why Valuation is a Trap and Market Sizing, Signalling and Sector/Geo-Specific Funds are all Noise

73 snips

Jun 17, 2024

Danny Rimer, a Partner at Index Ventures and a pivotal figure behind successes like Figma and Discord, opens up about his biggest investment misses, including Airbnb and Facebook, sharing invaluable lessons. He dismisses conventional wisdom around valuations and market size, labeling them as mental traps and noise. Rimer advocates for focusing on exceptional founders and product quality rather than chasing trends, emphasizing that the best investment opportunities exist beyond traditional IPO windows. His insights blend experience with a candid evaluation of the venture capital landscape.

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ADVICE

Make Decisions and Commit

Make clear decisions and commit fully.
Avoid revisiting decisions once made, as it breeds inefficiency.

INSIGHT

Investment Decision Process

Index Ventures uses a voting system where each investor has a vote from one to four, and seven to ten.
High conviction from the deal sponsor is crucial for investment decisions.

ADVICE

Theses and Founders

Develop strong investment theses to build conviction and guide decision-making.
Prioritize exceptional founders over strict adherence to theses.

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Danny Rimer is a Partner @ Index Ventures and one of the most prominent VCs of the last two decades. Danny has led Index to be one of the top global firms on both sides of the Atlantic. Among Danny's incredible portfolio, he has led or been involved with Figma, Discord, Dream Games, Etsy, Glossier and Patreon.

In Today's Discussion with Danny Rimer We Cover:

1. The Biggest Lessons from Missing Snap, Airbnb, Spotify and Facebook:

How did Danny miss investing in Brian Chesky and Airbnb when Brian says "Index is the best investor that Airbnb never had"?
What was Danny's biggest takeaway from turning down Daniel Ek and Spotify multiple times?
Why did Danny turn down the chance to invest in Facebook at $10BN? What did he learn from this?
Why did Index not lead Snapchat's Series B? How did that decision change Danny's mindset towards the concentration of positions in a fund?

2. The Biggest BS Rules in Venture: Market Sizing, Valuations and Signalling

Why does Danny believe that "valuation is a mental trap"?
Why does Danny believe that TAM is "noise" and should not be used to assess an investment?
Why does Danny believe that stage, sector and geo-specific funds are BS?
Why does Danny believe there are no IPO windows? Are IPO markets always open to the best?
Why does Danny believe that signalling is BS and does not exist today?

3. Lessons from the Biggest Wins and Losses:

What are Danny's biggest lessons from Index's $BN win in King (Candy Crush)?
How did the Discord deal come to be? What are Danny's biggest takeaways from it?
What are Danny's biggest reflections from losing 10s of millions on Nasty Gal?
What is Danny's biggest advice to a new investor today?

4. Lessons from Two Decades Building Index into a Premier Firm:

What specifically has Index done to enable them to do what no one else has done and win on both sides of the Atlantic?
How did the Benchmark partnership shape much of how Danny has constructed Index today?
Who does Danny view as Index's biggest competition? How has it changed with time?
Why is Danny more bullish than ever on the UK despite Brexit?