Leo Polovets: Susa Ventures will not abandon struggling portfolio companies
Leo Polovets · 20VC: Why Warm Intros Are Mostly Dumb, Why Ownership is Built On First Check and 4 Crucial Elements To Make Cold Inbound Attractive with Leo Polovets, General Partner @ Susa Ventures · Nov 12, 2018 · at 25:05
Leo Polovets is General Partner at Susa Ventures. He responds to host Harry Stebbings raising the argument that VCs should abandon poorly performing portfolio companies to focus on top performers.
0:00 / 0:32exact quote · 32.9s
720p mp4 · rendered on demand · StarZero watermark
“I strongly disagree with this. The first reason is, and this is actually kind of a personal reason, but, you know, my fund, Sousa Ventures, we talk about the investors and founders in our fund being a little bit like a family, and I know it's kind of corny, but we really mean it. So, just like you wouldn't disown your kid if they're not doing well in school, like, we're not going to stop talking to you or trying to help you just because you're struggling. I think that's actually... A more important time to help. And I think financial ROI aside, I think continue to spend time with people as they're going to do because, you know, we made a commitment to be helpful and dependable when you invested and we want to honor that whether things go well or not.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Leo Polovets
Polovets: Evaluating startup technology and CTOs at seed is a waste
“I spent most of my time trying to figure out how good is the technology, how good is the CTO. And it took me a few months to realize that that was probably just a waste of time for everybody.”
Polovets: Staggered valuation caps offer minimal dilution savings over upfront rounds
“Whether you raise all of it on five, or you raise a little bit on four, seven, and 10, most people think that the four, seven, 10 approach is way better, because the valuations go up so much. But it turns out, I think it's within about half a percent of diluti…”
Polovets: Startups fail from lack of product-market fit, not technology
“It's very rare for me to see companies fail because of the technology. It's almost always the product market fit is not there, or the team isn't able to recruit as much as they'd like”
Polovets: Solely accepting warm intros excludes non-traditional founders
“If you only meet people through introductions, you're going to be shutting yourself off from people who come from different backgrounds or spend time in their social groups or different settings.”
Polovets: Fund returns depend far more on initial seed checks than follow-ons
“Yeah, you know, I do believe, actually, that you make most of your money on the right initial bets, And the key is just to make those bets meaningful and trying to double down later helps, but I really think it's secondary.”
Polovets: Overpaying across a seed portfolio cuts overall fund returns in half
“I do believe price is important. I think everybody talks about if you invest in Uber, then the seed price doesn't matter. And I think if you invest in Uber, that's true. The seed price doesn't matter. But I think the challenge is that most investors think most…”