The Ledger
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Farmer: Major VC funds have devolved into momentum investors
“The major funds, I think, to drift away from their roots of sort of being that sort of foundational investor, and they've become much more momentum investors versus sort of the initial partner that a founder has from inception.”
Farmer: Founders care about operational support, not VC sourcing algorithms
“No entrepreneur gives a shit what, you know, algorithm we use to find them. They care about how we help them build the business as they should”
Farmer: Traditional VCs will fade away without investing in founder support
“I think the old guard VCs are on notice and that they have to make meaningful investments in better support of entrepreneurs or they'll fade away.”
Farmer: Traditional VC model is outdated and must be rebuilt from scratch
“After a few years, I felt that VC was outdated. So I left Bessemer to study one question. If you were to strip a venture curve down to the bare metal to where to recreate a firm from scratch, how would you build a next generation VC?”
Farmer: Most venture capital firms operate exactly as they did in 1970
“So for the most part, the way most VCs do business has barely changed since 1970.”
Farmer: Most venture capital data efforts are superficial window dressing
“Some firms have begun to dabble with data, but almost none have serious efforts in the area, so it's mostly window dressing at best.”
Farmer: SignalFire almost always beats traditional seed funds head-to-head
“And as a result of that, we have an unbelievably high win rate against the top venture firms in the industry and almost always win head to head against the seed funds because typically we're competing with, you know, two guys and a dog and we're bringing an ar…”
Farmer: SignalFire refuses to take board seats at the seed stage
“At the seed stage, we don't take board seats.”
Farmer: Traditional quarterly board meeting cycles move far too slowly
“Frankly, I think that the cycle of board interactions is far too slow.”
Farmer: Too many VCs lack conviction and rely on peer validation
“There's probably too many people who, and VCs in the industry who sit on the fence and don't have the conviction themselves to make their own decisions without Without pure validation. And so there's some awesome entrepreneurial, you know, investors that reall…”
Farmer: SignalFire does not use data to evaluate founder quality
“I'd still believe in, you know, heavily in human loop systems, and so we're not trying to assess the quality of the founder, you know, with using data.”
Farmer: SignalFire operates more like Uber than a database like Mattermark
“We're using technology to enable discovery, competitive intelligence, contextualization, collaboration, and ultimately support of our portfolio companies. So, so we look more like Uber than we look like Mattermark in that sense.”
Farmer hired six researchers to interview 500 founders and deconstruct VC
“I hired six researchers for a year in 2009 to study precisely that question. And we interviewed over 500 founders and 170 funds from seed to buyout hedge and every major venture fund in between.”
SignalFire employs 17 staff, primarily engineers and data scientists
“Today we have 17 full-time people on the team, and we have more engineers and data scientists than any other function.”