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20VC: IA Ventures' Jesse Beyroutey on Game Theory and How It Impacts Investor Mindset, How To Avoid "The Pressure To Deploy" Today In Venture & Why Ownership Is The Single Most Important Parameter When Investing

Jul 22, 2019

Jesse Beyroutey, a General Partner at IA Ventures, shares his journey from studying Systems Engineering to venture capital. He dives into game theory and its impact on his investing mindset, emphasizing the importance of startup positioning. Jesse discusses how IA Ventures avoids the pressure to deploy capital and why ownership is crucial when investing. He also addresses the evolving landscape of market defensibility, especially for agile startups competing against tech giants, highlighting strategic decision-making over mere financial backing.

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ANECDOTE

Joining IA Ventures

Jesse Beyroutey joined IA Ventures after college, inspired by a startup experience.
This ignited his passion for early-stage companies and their unique energy.

INSIGHT

Market Game Theory

Game theory analyzes dominant moves within a defined set of opportunities.
Market game theory applies this to capitalism and financial markets as a large-scale game.

ADVICE

Early-Stage Positioning

Early-stage companies must establish strong positioning and secure key resources.
This involves differentiating their message and cornering resources for a competitive edge.

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Jesse Beyroutey is a General Partner @ IA Ventures, one of the top-performing early-stage funds of the last decade. Their incredible portfolio includes the likes of TransferWise, DataDog, Digital Ocean, X.ai and The Trade Desk, just to name a few. As for Jesse, his investments at IA include Digital Ocean, IronClad, TransferWise, Sight Machine and more fantastic companies. Prior to joining the world of venture, Jesse studied Systems Engineering at the University of Pennsylvania.

In Today’s Episode You Will Learn:

1.) How Jesse made his way into the world of VC pretty much straight out of University and how that led to his being a GP with IA today?

2.) What is Game Theory? What does it mean to Jesse and how does it impact his investing mindset today? How does Jesse think about and assess startup positioning today? How important is positioning in the early days of the company? How does Jesse think about data as a sustainable moat or not? Does Jesse think in today's excess supply of capital environment that cash alone can be a moat?

3.) How does Jesse and IA think about portfolio construction today? Does Jesse ever feel the "pressure to deploy"? How have IA structured their own fundraises to ensure they never feel that pressure? How important a role does ownership play for Jesse when making an investment? Does Jesse believe ownership is built on first check?

4.) How does Jesse assess his own price sensitivity? How has it changed over the last 8 years? How does Jesse and IA approach both investment decision-making and reserve allocation decisions? How does the lead rely on the rest of the team when making decisions? Why does capital efficiency become a core question when determining reserve allocations?

5.) Why does Jesse feel that the reading to writing ratio that currently exists between founders and investors needs to change? What should the ratio be? How does the relationship between founder and investor change when the investor provides more content? How does Jesse look to avoid news cycles in the week? What works? What does not? What is Jesse's advice for anyone looking to do the same?

Items Mentioned In Today’s Show:

Jesse’s Fave Book: 7 Powers: The Foundations of Business Strategy

Jesse’s Most Recent Investment: Gauntlet

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

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