Discover/The Full Ratchet/Investor Stories 458: Anti Portfolio Les...

VC reveals the brutal math behind startup investing failure rates

The Full Ratchet · Investor Stories 458: Anti Portfolio Lessons: Netflix by...

“investing in a startup, which doesn't make returns and goes away, I don't feel like sorry because I'm in the high risk business.”

7:19 / 7:40

investing in a startup, which doesn't make returns and goes away, I don't feel like sorry because I'm in the high risk business. I'm like in a high risk business. I know that there will be 10 companies, nine companies out of 10, which are not gonna make it. So it's like the whole story about venture. So you invest $1

About this clip

A venture capitalist explains their mindset toward startup failures, emphasizing that losing investments are an expected part of the high-risk VC business model. They break down the fundamental reality that 9 out of 10 startups won't succeed, framing failure as a mathematical inevitability rather than something to feel sorry about.

Why this clip

This clip captures a core VC mindset that many founders and aspiring investors need to understand about how professional investors think about risk and failure.

7:19 - 7:4021sframework
venture-capitalstartup-failurerisk-management

Share

LinkedInX

What they said next

Why this top VC passed on Chime despite loving the team

9:49 - 38s · personal lesson

More from this episode

The Full Ratchet

personal lesson

VC admits passing on Netflix when it was just Blockbuster by mail

A venture capitalist shares two major missed investment opportunities from his anti-portfolio. He explains why he passed on Netflix in its early DVD-by-mail days due to lack of data on customer retention, and mentions another miss with Palantir through a Peter Thiel introduction.

1:28 - 2:0738s
anti-portfolioinvestment-mistakesdue-diligence

The Full Ratchet

personal lesson

Why this top VC passed on Chime despite loving the team

A venture capitalist explains why he passed on Chime's seed round despite the founders' proven track record with Green Dot. He shares his reasoning for rejecting what seemed like a logical digital pivot from a successful team, illustrating how even experienced investors can misjudge market opportunities.

9:49 - 10:2738s
seed-investingfintechinvestment-decisions

The Full Ratchet

personal lesson

We won the Veeva deal on Friday - then everything changed

A VC shares the beginning of a deal story about missing out on Veeva Systems, the vertical SaaS platform for pharmaceuticals. The partner describes how they had a thesis around vertical SaaS early on, pursued the company, issued a term sheet, and were told they won the deal on Friday - setting up what appears to be a cautionary tale about deals that slip away.

3:39 - 4:0425s
vertical-saasdeal-sourcingmissed-opportunities

The Full Ratchet

tactical advice

VC writes 15 pages on deals he passes vs 5 on investments

A venture capitalist reveals his counterintuitive documentation practice: writing three times more detailed notes on deals he rejects than ones he makes. He explains how this extensive reflection on missed opportunities helps him understand and avoid future investment mistakes.

8:55 - 9:1519s
due-diligencedecision-makinginvestment-process

The Full Ratchet

Consequences

He passed on Chime, although he invested in a bunch of great companies like Coinbase. So amazing investor. One of the best in FinTech.

Demonstrates that even top-tier investors with great track records (Coinbase investor) can miss obvious opportunities. The juxtaposition of success (Coinbase) with the miss (Chime) makes the point about how difficult venture investing really is.

9:33 - 10:0230s

Similar clips from other shows

Riding Unicorns

market insight

UK tech raised in one month what it used to raise in entire years

Dom Hallas reveals the explosive growth of UK's tech ecosystem, highlighting that venture capital raised in just May 2024 exceeded the entire year's funding from 2014. He sets up context for discussing recent government budget changes that founders and investors need to understand.

3:57 - 4:3638s
uk-tech-ecosystemventure-capitalgovernment-policy

a16z Podcasta16z Podcast · Anish Acharya

framework

VC breaks down the three types of risk every investor must choose

Anish Acharya outlines his framework for evaluating investment risk, identifying three key categories: competitive risk (can you win), pricing risk (did you overpay), and team risk (can founders execute at scale). He explains how each type of risk manifests and which ones are worth taking as a VC.

47:46 - 48:2337s
investment-riskventure-capitaldue-diligence

Building Great Tech

founder story

Founder hits rock bottom then investor calls 3 weeks later

Daniel Cheaib shares the darkest moment of his startup journey when the team ran out of cash, stopped working on the product, and he had to take a second job while facing his fear of failure. Just when everything seemed lost, an investor reached out and changed their trajectory in three weeks.

33:38 - 34:3355s
founder-strugglesstartup-failurefundraising

a16z Podcasta16z Podcast

market insight

Traditional VC categories are breaking down as AI models blur infrastructure and apps

The speaker explores how AI is disrupting traditional venture capital categories, particularly the blurring lines between venture and growth funding, and between infrastructure and application companies. They use model companies as an example of this category confusion - these companies function as both horizontal infrastructure platforms and direct consumer applications.

6:48 - 7:2234s
ai-modelsventure-capitalinfrastructure-vs-apps

From the blog

FrameworkOriginal Research

The 5 Clip Archetypes for VC Podcasts

10 min read

Comparison

Clypt vs Opus Clip: Why Generic AI Clippers Fail on VC Podcasts

8 min read

Want clips like this for your podcast?

We find your top 5-8 clips, write the hooks, and deliver ready-to-post content. First 2 episodes are free.

Get 2 Episodes Clipped Free