The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified

Niki Pezeshki of Felicis Ventures joins Nick to discuss Finding Markets with Long-Term Tailwinds; Macro Impacts on Venture; and Robust vs. Fragile Data. In this episode, we cover: Background and path to venture. Thesis at Felicis and your focus there? How has the pandemic affected your approach to investment? You’ve mentioned that you look for market tailwinds, especially tailwinds that will be lasting. Right now, we’re seeing a number of shifts that will have lasting effects -- which are you watching most closely? Why do you think the public markets have, largely, stayed high during a very large health and economic crisis? Can you give us an overview on your three-part investing framework for making investment decisions? Where do you look for these large shifts, creating opportunity -- aside from Mary Meeker's report? How do you make sure you are current on-trend instead of getting anchored on data that's old or fragile? What are you looking for in the business model that indicates to you that it is not only the correct approach but can lead to transformational changes in the industry? In which types of businesses do you like to see product-focused founders versus marketing-focused founders, is there a heuristic or systematic way that you think about this? You mentioned that business is a formula and that it’s clear early on whether it’s going to work or not -- can you give us an example of the formula? What's your approach to coaching and advising founders?  There's this fine line between being overbearing w/ advice and not providing enough insight in an area that could derail a company.  How do you strike the balance? What keeps you up at night... the ones you invested in that you shouldn't have or the ones you didn't invest in that you wished you had? 3 Data points: Let's say that you have a consumer SaaS company that is doing 300K in ARR, growing 20%  MoM and that’s all you currently know about the company. Which 3 data points do you ask for and why? To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes. Also, follow us on twitter @TheFullRatchet for updates and more information.

On this special segment of The Full Ratchet, the following Investors are featured: M.G. Siegler Grace Isford John Vrionis Ash Rust Each investor highlights a situation where they decided not to invest, why they passed, and how it played out. To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes. Also, follow us on twitter @TheFullRatchet for updates and more information.

Henrique Dubugras of Brex joins Nick to discuss the Blazing Fast Path to $B+; Binary Outcomes; The Fintech Revolution; and A New Approach to Employee Comp. In this episode, we cover: Background -- path that led to Brex? Origin story for Brex Tag-line / One sentence overview What's so different about Brex? Why is more than just a credit card? How has the pandemic affected the business thus far? What do you offer that no one else does? Who do you consider to be competition? What is the moat here - why can't another well funded startup replicate your offering? A criticism I've heard is that, when businesses need credit most, when bank balance/working capital is low, is when Brex cuts off access to credit. What's your response? How would you describe your leadership philosophy? Are you recruiting/hiring? Is the approach different while 100% remote? What's the compensation structure at Brex? One of the fastest companies to multi-billion+ valuation -- more pressure w/ all that capital? With the raise and expectations some suggest that the outcome is binary -- is it? What advice do you have for early-stage, pre-A, founders trying to build a venture scale business? To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes. Also, follow us on twitter @TheFullRatchet for updates and more information.

On this special segment of The Full Ratchet, the following Investors are featured: Ryan Gembala Scott Dorsey Elizabeth Yin Jeff Fluhr Each investor discusses a portfolio company that did not survive and why it was that they failed. To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes. Also, follow us on twitter @TheFullRatchet for updates and more information.

Gigi Levy-Weiss of NFX joins Nick on a special Crisis Coverage installment to discuss What's Next in Gaming; The True Essence of Product-Market-Fit; & Investing with an Emphasis on Retention and Engagement. In this episode, we cover: Background and path to venture. The thesis and your focus at NFX? Did you invest in Houseparty when it was Meerkat? You've written about your thoughts on PMF...  How do you assess whether a company has real product market fit? What advice would you have for those still trying to find it? With this focus on product and retention...  What's your response to investors that say distribution is more important than product? Why do you think VC interest has been declining in the gaming space? What has been the history/evolution in the gaming sector? What's next for gaming -- Is there a step beyond the platform? Are there any niches or segments within gaming or esports where you see the most potential? 3 Data points: Let's say a gaming startup comes to you... they have 50k DAUs, K value of 1, 20 % MoM growth...  What 3 data points do you ask for and why? To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes. Also, follow us on twitter @TheFullRatchet for updates and more information.

On this special segment of The Full Ratchet, the following Investors are featured: Scott Kupor Melody Koh Tom Tunguz Jim Douglass

Jaclyn Hester of Foundry Group joins Nick on a special Crisis Coverage installment to discuss GP and LP Alignment, Challenges for Emerging Fund Managers, and How the Explosion in Seed Fund Volume Plays Out. In this episode, we cover: Tell us about your background and path to VC. For those who don't know, talk about the approach at Foundry with both the LP and GP model. Foundry traditionally had no apprenticeship model and no junior investors... were you the first? Pandemic... Are you making investments currently and what are you hearing from other LPs? What's your advice for GPs re. building relationships and momentum w/ LPs during these uncertain times? What's the biggest mistake emerging managers make when fundraising? What do new fund managers underestimate when starting a venture firm? Does it matter how specific a thesis is? Do you need to see a unique, focused and compelling edge or are you just as receptive to a generalist w/ a strong network and track record? What question tends to trip up GPs? What are some of the most important things GPs should ask LPs when raising? What do you think are the most important things GPs and LPs need to be aligned on for a successful relationship? How does the explosion in volume of seed funds affect you approach to selection? How do you think this plays out -- most funds fail? Returns more evenly distributed? Power law no longer applies (or is less pronounced)? Fast forward 5 years and let's assume there's been a fundamental shift in early stage Venture. What do you think is the most likely, largest change that's occurred? What advice do you have for young people that aspire to be a VC someday? Not going to ask for favorite GPs but, I will ask, if you could break quarantine to grab a cocktail w/ one GP -- who do you choose? ; ) 3 Data Points... You’re approached by an emerging VC firm raising fund II. The fund manager did not work for a large, brand-name venture firm before and she has never had an institutional investor. Net TVPI is 1.4, and Net IRR is 35% and it's a 2018 vintage. The catch is you can only ask 3 questions (for 3 additional data points) to make your decision. What 3 questions do you ask? To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes. Also, follow us on twitter @TheFullRatchet for updates and more information.

Nick Rishwain and Hannah Konitshek of The LegalTechLive Podcast interview Nick to discuss Advice for Founders -- Reaching out to VCs, Pitching over Zoom, and Closing Capital Amidst a Pandemic. In this episode we cover: How have valuations been impacted from the pandemic? How long will lower valuations persist? Are VCs actively doing deals right now? What's the most common mistake that founders make when approaching you for funding? How much information would you prefer a founder share with you upfront (deck, financials, incorporation, docs, etc.)? How often have you met a founder early, been added to their monthly update list and then come back to make an investment? Should founders become more clinical when selecting investors? How do you convince founders on New Stack as an investor? There is one area that New Stack is really hands-on -- what is it? What are some things a founder can do to get funded while  he's only got a well thought out idea and business plan? Many founders don't know if their business is venture scale.  How do you determine if a business is venture-backable or not? How does a sector that hasn't had huge exits at large multiples (like LegalTech) impact the way you assess startups in that sector? How do you evaluate high recurring revenue vs. low recurring revenue? Do you have any suggestions for a founder that is pitching now that it is completely remote? Overall advice you're giving your portfolio companies right now? To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes. Also, follow us on twitter @TheFullRatchet for updates and more information.

On this special segment of The Full Ratchet, the following Investors are featured: Alex Osterwalder Beezer Clarkson Michael Cardamone Leo Polovets Each investor illustrates a critical lesson learned about startup investing and how it's changed their approach. To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes. Also, follow us on twitter @TheFullRatchet for updates and more information.

Shawn Carolan of Menlo Ventures joins Nick on a special Crisis Coverage installment to discuss the Four Fundamentals of Investing; the Future of Micro Mobility; and Hunting Consumer Unicorns. In this episode, we cover: Tell us about your background and path to venture. What's the thesis at Menlo Ventures? Can you explain the "Four Fundamentals" framework for investing and give us a brief description of each? What are you looking for in terms of unit economics? You like to invest in technologies that change everyday life for the better.  Do you have a sense for the needed technologies and then find founders in those areas, or do you identify compelling entrepreneurs that then guide you to emerging technologies that will shape the future? Have you been in the situation where you identified the right consumer trend and technology required to deliver but you picked the wrong startup? Is there a priority of importance amongst the four? Which do you think investors most often get wrong?  Let's talk about consumer a bit...Many VCs think that consumers and consumer behaviors evolve quickly in unpredictable ways.  And b/c of that many VCs avoid consumer.  What's your response? We’ve seen an explosion in Cloud and SaaS recently, and some question whether there’s room for another big consumer company, what is your response to this and which areas do you see the biggest opportunities in? Before the pandemic, the future of scooter companies was murky with challenging unit economics and fleet maintenance... while governments were, in some cases, were imposing regulations and putting a halt to deployment.  What does the future hold for the scooter companies? How do you view these situations, like scooters, where there’s low differentiation and a number of players trying to scale and grab share quickly? Any other micro-mobility trends that you’re watching closely, aside from scooters? Changing gears away from micro mobility and into AI for a bit, why do you think we haven't seen many unicorns in consumer AI? Where (sectors, categories) do you think the initial consumer AI unicorns will come from? Let's say that you have a micro mobility company that is currently operating in 3 cities within one region, grossing $500K monthly and growing 30% month to month. Which 3 data points do you ask for and why? To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes. Also, follow us on twitter @TheFullRatchet for updates and more information.