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

20VC: Bain's Matt Harris on Why Valuation And Market Size Are Not The Most Important Thing At Series A, Why Backing Sociopaths Can Work & Late Cycle Momentum Investing & The Changes That Will Stay in Venture Forever

6 snips

Sep 23, 2019

Matt Harris, Partner at Bain Capital Ventures and fintech expert, shares fascinating insights from his extensive career. He discusses how the dot-com boom shaped his investment philosophy and why he believes traditional metrics like valuation are less important at Series A. Harris also explores the idea of backing unconventional founders and the implications of late-cycle momentum investing. Highlighting the shift in market dynamics for payment solutions, he explains that solving niche problems can lead to significant growth opportunities.

Ask episode

AI Snips

Chapters

Books

Transcript

Episode notes

ANECDOTE

Fintech Focus

Matt Harris entered venture capital during the dot-com bust, founding Village Ventures in 2000.
He specialized in fintech, a then-nascent field, foreseeing innovation potential.

INSIGHT

Double-Edged Fear

Experiencing the dot-com bust instilled a fear of market cycles in Matt Harris.
However, this fear has caused him to miss opportunities during the current bull run.

INSIGHT

Ownership Over Valuation

Series A valuations matter less than ownership percentage.
Focus on acquiring a meaningful stake (18-25%) in promising companies.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

Matt Harris is a Partner @ Bain Capital Ventures, a leading US venture fund with a portfolio that includes the likes of LinkedIn, Lime, SendGrid, Jet.com and more incredible companies. As for Matt, he specialises in financial technology and services and has led investments in the likes of Acorns, OpenFin, SigFig, Ribbon and Billtrust. Prior to joining BCV, Matt founded Village Ventures, which he ran for 12 years and where he focused on early-stage fintech investing. Before Village Matt actually started his investing career Bain Capital private equity in 1995.

In Today’s Episode You Will Learn:

1.) How Matt made his way into the world of venture from private equity and what led him to specialise as he has done in the world of fintech?

2.) How did seeing the boom and bust of the dot com impact Matt's investing mindset today? How has Matt's fear of the cyclicality of markets actually lost him a lot of money in the past? What has that taught Matt on trying to time markets? What were the main takeaways for Matt from running his own firm? How does it differ to a partnership?

3.) Why does Matt believe we are seeing late-cycle momentum investing today? What is the evidence to suggest this? How does Matt think about the right cadence to invest through market cycles? What does Matt mean when he says, "Series A valuation does not matter anymore"? Why? How does Matt assess his own price sensitivity today?

4.) Why does Matt believe that investing in improbable ideas is a good strategy? What does this mean the internal investment decision-making process looks like at Bain? Why is full consensus sometimes a concern? How does Matt approach market sizing? Why does it not matter at Series A? When does it really start to matter?

5.) Matt has said before that "backing sociopaths can work". What did he mean by this? What founder type does Matt most like to back? Does one have to manage the relationship with them very differently to other founder types? What are the acceptable risks vs unacceptable risks with this founder type?

Items Mentioned In Today’s Show:

Matt’s Fave Book: The Third Plate: Field Notes on the Future of Food

Matt’s Most Recent Investment: Finix

As always you can follow Harry, The Twenty Minute VC and Matt on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.