VCs must avoid letting expert references kill great disruptive ideas
Dayna Grayson · 20VC: NEA Partner, Dayna Grayson on Sourcing, Picking, Winning, Gut vs Data in Investment Decision-Making & The Evolution of Entrepreneurial Expectations of Venture · Apr 8, 2019 · at 16:30
Dayna Grayson, Partner at NEA, shares diligence advice for venture capitalists on why relying too heavily on traditional industry experts can lead to missing breakthrough investments.
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“Beware of the expert reference. I got this advice early on, also from Scott Sandel at NEA, which is we're often, in our diligence, prone to go call around and make sure we're shoring up our assumptions, and those can be some of the most helpful diligence calls because the spaces you're investing in are not They're not written about online. They're not written about in reports. We all know this, right? So you've got to use your networks to really diligence them. But if you're relying on an expert, make sure you know what you're trying to understand in that expert call. That expert, most likely, if you tell them about the whole idea, which you may or may not want to do, is probably going to say, there's no way that industry could be disrupted this way. And that's a very natural reaction because what you're investing in is supposed to be so brand new that it's never been done before. But if you put too much stock on that, you could be talked out of some great ideas.”
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