Opinion
Older founders are more efficient in spend and thinking than younger ones
“Yes, I believe that older entrepreneurs have the same or more fire. Sometimes the younger entrepreneurs are as technically adept or more than younger entrepreneurs as They drive value. Because of their experience, they're actually more efficient, both in spend…”
Assertion Not checkable as stated
Acqui-hires now yield only 1x to 1.5x returns for early investors
“What I've seen has been that, in reality, some of those transactions look a lot more like return of capital or maybe one and a half X kind of returns, and it's no longer that lucrative on that side.”
Assertion Not checkable as stated
Big tech is slowing acqui-hires due to internal backlash over retention
“A lot of those companies are slowing down the tech and talent deals because what they found was they were Angering their existing employee base”
Assertion Not checkable as stated
More tech companies were created from 2008 to 2018 than prior history
“There have been more companies created in the last 10 years than probably the entire technology business before that”
Assertion Not checkable as stated
Acqui-hires are becoming increasingly unfavorable for early-stage investors
“A lot of the large companies are no longer really thrilled with tech and talent acquisitions, and those Acquisitions are turning into less and less friendly for early investors”
Prediction Not checkable as stated
Multi-stage VCs will abandon seed investing when the workload accumulates
“I think there's a chance that that may happen again, and as you know, these markets shift and twist and turn, and so I think there could be a chance that these guys, again, intercede, but aren't all that committed when they see how much work there is, where th…”
Insight
Founders should raise maximal runway before Series A to maintain leverage
“I believe that the reality is that you want as much runway as possible in order to have as much leverage when you get into that A round.”
Disclosure
Dan Scheinman wrote a seed check to Eric Yuan before seeing a pitch
“And so at that moment, to be honest, I didn't even care what he was doing. I said, I'm going to write you a check. I'm in because you're the kind of leader that it almost doesn't matter what you're building. I believe in you. And I did write him a check”
Insight
Seed investing is 70% EQ and people evaluation
“Truth is, it's 70% of it is really the EQ, because this is all about the people.”
Opinion
Dan Scheinman prefers priced rounds and SAFEs over convertible debt
“So my ideal preference is to do a price round. My second preference is to do effectively a safe. My dislike is of the convertible debt. I think it's ultimately, it's a lose-lose for both sides when things don't go so well.”
Insight
The biggest sin in venture investing is missing outlier winners
“The biggest sin is missing that 10% deal that's the huge winner, right? Because no amount of mediocre kind of deals can make up for missing Uber or whatever, Zoom or Arista or whatever you want to say. No amount of things can make up for missing something that…”
Insight
Founders in top deals often ask angel investors to forego pro rata
“And the other thing that happens in good deals is the founder frequently doesn't want you to do your pro rata because they want to give the new investors as much room as possible. So I found that there's an alignment generally in the good deals that, hey, stic…”
Prediction Not checkable as stated
Seed investing requires concentrating on a few disruptive winners
“I'm focused on finding those few companies that can provide really disruptive returns in order to be able to keep funding the business.”
Prediction Not checkable as stated
Dan Scheinman predicts a return to large-scale tech M&A
“So I have, for a variety of reasons, not Participated in secondaries so far, and I believe that there will be exits, that great companies eventually will exit, that we will see a return to some larger M&A in markets where it becomes so critical for some of the…”
Insight
Seed angels must be contrarians to compete with mega-funds like Sequoia
“So you have to be increasingly a contrarian in order to try and be successful in a world where Sequoia and others are going to be aggressive.”
Insight
Startups need cash reserves during fundraising to prevent predatory VC pricing
“I think you need enough money so that you can achieve your milestones and achieve the mythical product market fit, and still have enough money in the bank that the VC goes, Ooh, I better invest now, rather than let them say, ooh, I'll wait this out, and I'll g…”
Assertion Not checkable as stated
Eric Yuan received 2,000 resumes within a week of leaving Cisco
“Eric said to me, he said he had about, I think it was about 3000 people who worked for him, And within a week of leaving, he had 2000 resumes in his inbox of people who wanted to work for him.”
Opinion
Overpriced seed rounds deter price-disciplined Series A investors
“There's a certain price which I think is too high because what I worry about is not that it doesn't work out numbers-wise, but I worry that it detracts or deters A-round people from actually investing. Because they are more price disciplined.”
Insight
Angel investors need an explicit thesis defining what deals they will avoid
“To be a successful angel investor, you have to understand that clear thesis, and that clear thesis has to tell me what kind of deals you won't do, As well as what kind of deals you will do. And you have to be prepared to defend that thesis. And I think if you …”
Disclosure
CyCognito's pitch was the best angel presentation Dan Scheinman saw since Zoom
“First, it was the single best angel presentation I had seen since Zoom”
