The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
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Cillufo: QED passed on Nubank and Loft seed rounds over high valuations
“We turned down both NewBank and Loft at their seed stage, right? So in both cases, we knew the CEO long before they had the idea for the company... And in both cases, they had what at the time looked like offer sheets with really high valuations. We looked at …”
Cillufo: VCs cannot rely on operator skills to fix incomplete founder teams
“One of the terms we use is operators masquerading as investors. A lot of us have experience either at Capital One or at startups or other places operating businesses. And I do think at times we've fallen in love with an idea. We may not have been totally sold …”
Morris: Unprofitable heavily funded startups will ultimately fail
“There's a thing called the just world hypothesis, and in the end, unit economics drive P&Ls. And if your business is built on a house of cards, and your unit economics don't make any sense, in the end, your business will not succeed. And that competitor, albei…”
Rotman: QED's 100x+ wins de-risked their business models on minimal capital
“If I look at the history of our 20 X pluses and we have a few hundred X pluses, like these were businesses that for very limited amounts of money were able to de-risk the business so that you knew that you were on, on a path to something very big.”
Rotman: Generating 12x early investor returns on $300M exit requires under $30M raised
“In order to do that with a three hundred million dollar outcome, it means you have to have invested less than thirty million dollars of capital to get to that point.”
Rotman: QED Has Another 6 to 12 Potential IPOs in Portfolio
“We see the potential in our own portfolio for, you know, another half dozen or dozen like IPOs that are kind of orienting themselves and getting ready when they get to sufficient scale”
Rotman: QED offers intended as top bids were outbid by 2x
“We've done it with a number of companies over the past year where the environment has just shifted so quickly, where I thought we were offering the highest price that we could, and it was the lowest by a factor of two.”
Cillufo: Growth companies should plan to avoid fundraising for 12–18 months
“Related to the growth stage companies, I think very similar conversations are happening across geographies, across business types, and it's almost all of the flavor of, look, you shouldn't be planning on needing to raise money in the next 12 to 18 months.”
Cillufo: QED's biggest investment misses resulted from balking at high valuations
“Our biggest misses have been on this question of valuation. Love the team, love the business, love the opportunity, have a great relationship, feel like this is going to work, and then we just sort of balk at the price.”
Rotman: Breakout companies QED passed on pivoted completely from original decks
“A lot of the biggest companies that we passed on, if you actually saw the original thesis behind the company, the original investor deck, the ultimate business didn't look anything like what the original thesis was.”
Morris: QED invested in Bitso despite his crypto denial
“There are two that we've just done now. One is investment in Bitso, which we announced a few days ago. I've been a crypto denier. I don't get it. I can't predict if it's going to go up or down. But what I do know is crypto is a thing, and people want it.”
Frank Rotman: QED Investors acts as hands-on employees for portfolio companies
“I mean, we almost become employees of the company. In the early days to help them accelerate their path.”
Rotman: Modern startup growth velocity far outpaces 2008 benchmarks
“When I first started in this industry in 2008, You know, the best companies would grow by two X year over year. And now you're looking at companies that between the signing of a term sheet and the final documentation, a company could have doubled or tripled.”
Cillufo: QED's consensus orientation has sometimes slowed down its deal execution
“Because of this consensus orientation and this desire to get so much input, I think at times we haven't been as fast as we've needed to be.”
Cillufo: Retrofitting unit economics into a startup later is extremely difficult
“And it is one of the things I've learned now working with the 150 companies in our portfolio. It's really not easy. And if you don't do it from the start, it's much harder to add later.”
Cillufo: QED favors upfront monetization but navigates deferred models better now
“Admittedly, it's a little easier sometimes for QED to invest in businesses where monetization is built in upfront. That's not always the case. And I think over the years, we've learned how to be much better at partnering with so-called act two businesses where…”
Cillufo: Multiple QED investments doubled in size between term sheet and close
“The number of companies that we've invested in the last couple years that have literally doubled between when we submitted a term sheet and when we closed the deal, it's stunning.”
Cillufo: Most fintech businesses are default local and need regional adaptation
“I think most fintech businesses are default local, and that unless you sort of go through heroic efforts, they're probably not going to work in the next country unless you really adapt.”
Cillufo: Single-lead investment rounds have largely replaced shared venture rounds
“Venture firms used to share rounds. I think it's much more common for one of them to lead than the next one to do the next round.”
Cillufo: QED urged portfolio founders to take preemptive hot-market money
“By and large, our advice over the past several months is take the money because the market is so hot. You never know if that market's going to continue. You never know if you're going to be able to tap that again. I think we've been pretty aggressive over the …”
Rotman: Startups now grow faster during deal closing than 2008 winners did annually
“When I first started in this industry in 2008, you know, 2009, 2010, the early vintages of companies that we ended up investing in, the best companies would grow by two X. And now you're looking at companies that between the signing of a term sheet and the fin…”
Rotman: QED portfolio non-participation creates no signaling risk
“No, there's no signaling risk because some of the companies that are the absolute rock stars in our portfolio, like they grow beyond our ability to even fund them given the market dynamics.”
Rotman: Every startup experiment produces either proof or anti-proof
“Everything that you do is either proof or anti-proof, right? Everything that you learn falls into one of those two categories. You're either proving that the assumption that you had is correct, Or you're getting anti evidence that it actually isn't correct.”
Morris: Growing a 4x return to 5x is easier than saving a 0x
“In venture, it's much easier to turn four X into five X than turn zero X into one X. Clearly mathematically the case.”
Morris: 4x return with founder respect beats 5x while despised
“I much prefer to get four X and be loved and respected than five X and be despised and feel like we took advantage.”
Cillufo: Multiple QED portfolio companies made three to five annual acquisitions
“We've seen a number of our companies in our portfolio actively buying three, four, five companies a year over the last couple of years.”
Cillufo: Later-stage startups raised massive war chests in early 2022
“So many of the later stage companies, both in our portfolio and around the world, have raised a ton of money over the last three to six months. And so many businesses are sitting on very impressive war chests that they were assuming they would use to grow real…”