Emily Melton, partner at DFJ, explains how venture investors mature over time from initial over-optimism to deep cynicism before learning how to evaluate startup risk properly.
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“You go through a process as a VC, which is, you know, it's almost like the Gartner hype cycle, right? Everything is great, and then you go through the trough of disillusionment where you hate everything, right?”
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Opinion
VCs rely on simplistic thinking by backing YC and Harvard dropouts
“This is where I do think people and in my industry can be simplistic in their thinking. And they, in some ways it's like being safe. No one's going to look at you funny for investing in a company. That's a young guy out of YC with a hoodie that dropped out of …”
Emily MeltonJan 11, 2017▶ 12:4220VC: Why You Should Not Invest From Patterns, Why No Good Business Was Built As An Analogy Of Another & Why The Rise Of The 'Celebrity Investor' Is Concerning with Emily Melton, Partner @ DFJ
Insight
No substantial business was ever built as an analogy to another
“No wonderful business, no substantial business was built because it was an analogy off of something else.”
Emily MeltonJan 11, 2017▶ 8:2220VC: Why You Should Not Invest From Patterns, Why No Good Business Was Built As An Analogy Of Another & Why The Rise Of The 'Celebrity Investor' Is Concerning with Emily Melton, Partner @ DFJ
Insight
Judging all startups by outlier growth forces premature capital risk
“I think that some of the trajectory of some of these amazing companies, which are truly outliers, that have had this, you know, up and to the right success, has forced all companies to be, you know, judged by that same curve, and that's not the way that, that …”
Emily MeltonJan 11, 2017▶ 29:2820VC: Why You Should Not Invest From Patterns, Why No Good Business Was Built As An Analogy Of Another & Why The Rise Of The 'Celebrity Investor' Is Concerning with Emily Melton, Partner @ DFJ
Disclosure
DFJ succeeded in Tesla and SpaceX by staging early capital
“And that's why, you know, we were able to be successful with entities like Tesla or SpaceX. Companies that most people would find as not working well for venture, but the way that we thought about it and how we, you know, got involved in the companies at early…”
Emily MeltonJan 11, 2017▶ 15:0820VC: Why You Should Not Invest From Patterns, Why No Good Business Was Built As An Analogy Of Another & Why The Rise Of The 'Celebrity Investor' Is Concerning with Emily Melton, Partner @ DFJ
Insight
Early-stage VCs must evaluate upside potential over downside protection
“What you really want to think through, it's not the downside scenarios, because we're investing early, and we're not writing large, large What we really need to understand and what we're evaluating new opportunities is how much could this be worth if everythin…”
Emily MeltonJan 11, 2017▶ 16:2520VC: Why You Should Not Invest From Patterns, Why No Good Business Was Built As An Analogy Of Another & Why The Rise Of The 'Celebrity Investor' Is Concerning with Emily Melton, Partner @ DFJ
Opinion
The rise of celebrity VCs and personal branding is disturbing
“One of the things I have found a little bit disturbing is this rise of kind of the celebrity investors or all of this need to do personal branding, particularly for venture capitalists early on in their career, because I think what really demonstrates if we're…”
Emily MeltonJan 11, 2017▶ 20:1220VC: Why You Should Not Invest From Patterns, Why No Good Business Was Built As An Analogy Of Another & Why The Rise Of The 'Celebrity Investor' Is Concerning with Emily Melton, Partner @ DFJ
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