“We're a large investor in a company. We invested early stage company got acquired for about a billion dollars by a public company. And within a week of receiving our proceeds I asked our team to distribute the whole position.”
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More from Shardul Shah
Insight
Shah: Team quality is far more important than market in VC
“Like, there's this canonical question, I think, in our industry. Is it the market or is it the team, right? And I think many great firms would argue that it's market. In my view, it's very clearly the team.”
Shardul ShahSep 16, 2024▶ 8:03Shardul Shah: How Index Makes Decisions & Why Benchmarks & Averages in VC are BS | E1202 · 20VC with Harry Stebbings
Insight
Shah: Pattern recognition and VC benchmarking are exercises in psychological safety
“There's so much long tail risk in a company that I feel like the exercise around pattern recognition benchmarking as just like two examples, risk mitigation as a third are exercises in psychological safety.”
Shardul ShahSep 16, 2024▶ 30:30Shardul Shah: How Index Makes Decisions & Why Benchmarks & Averages in VC are BS | E1202 · 20VC with Harry Stebbings
Opinion
Shah: Total addressable market calculations are a trap for venture investors
“TAM is a trap. Like, go back and look at the S-ones of some of the biggest public companies today. Their market caps are bigger than what they thought the TAM would be.”
Shardul ShahSep 16, 2024▶ 13:59Shardul Shah: How Index Makes Decisions & Why Benchmarks & Averages in VC are BS | E1202 · 20VC with Harry Stebbings
Insight
Shah: VCs fail by picking wrong investments, not overpaying
“But when I think about conviction in people at the earliest stages I think you can be really elastic on price. At late stage, if you have conviction, price is just a representation of like future expected, expected free cashflow, right? So you're probably not …”
Shardul ShahSep 16, 2024▶ 12:02Shardul Shah: How Index Makes Decisions & Why Benchmarks & Averages in VC are BS | E1202 · 20VC with Harry Stebbings
Insight
Shah: Follow-on rounds require rebuilding the investment case from scratch
“So I'm not thinking about averaging down my cost basis. I'm not thinking about incrementally increasing my ownership. I'm building a net new investment case on, can I create, you know, a fund returner? And with that, like I do all the work again. So if I think…”
Shardul ShahSep 16, 2024▶ 18:57Shardul Shah: How Index Makes Decisions & Why Benchmarks & Averages in VC are BS | E1202 · 20VC with Harry Stebbings
PredictionNot publicly verifiable
Shah: Index Ventures targets 5x upside on late-stage growth investments
“It's super dangerous. I think to say there's a safe two X, there's no such thing. And you alluded to this with the memory of all of the activity from 2021. There's no such thing as a safe two X. And so what we're looking for is definitely five X plus upside, e…”
Shardul ShahSep 16, 2024▶ 20:37Shardul Shah: How Index Makes Decisions & Why Benchmarks & Averages in VC are BS | E1202 · 20VC with Harry Stebbings
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