The Ledger
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First Round lost Twitter and Dropbox seed deals over valuation limits
“First round offered Twitter their first term sheet months before Union Square led their round. We offered Dropbox their first term sheet, and I'd say we lost both of those due to sticking to price.”
Kopelman passed on Twitter at $5M and $20M pre-money valuations
“So, we offered Twitter a term sheet at a five million pre-money valuation. We were an investor in Odeo, Eb Prior companies. So I think I was user Twitter user number 275. We were right there. We offered five. Fred came in at 20 a few months later, and to make …”
Kopelman: VC ownership must be established on the initial check
“Our view is that it's pretty important to build it on first check. I think that it just gets so expensive to accumulate ownership in the later rounds that to some degree, I think your ownership is your first check and later investments are more of a cash on ca…”
Kopelman: Startup failure is largely determined at idea selection, not execution
“I believe that a high degree of startup mortality is baked in at the pick and not on the execution.”
Kopelman: Partner selection matters more than company picking for firm longevity
“I believe that when I look back at my career in venture, I would rather be known as a better picker of partners than a picker of companies, because that's what enables a venture firm to scale, grow, and endure just beyond any one person.”
Kopelman: First Round treats each new fund as a fresh cap table
“At first round, we really view each new fund as a new cap table so that there isn't that partner tax from the prior generations of partners”
Kopelman: First Round does not track or report individual partner IRR
“We don't track individual partner IRR of individual track partner Performance, and nor do we share it with our LPs when they ask us during diligence.”
Kopelman: Platform shifts favor college rookies over Wall Street veterans
“We're seeing it now in crypto, for example, where I'd argue that there are seniors in college who have just more experience in crypto than derivative traders at Goldman Sachs. It's this dislocation in the experience curve. That creates real opportunities for r…”
Kopelman: AI reduces the competitive gap between rookies and life science veterans
“And when you sit down and look at life science and healthcare companies and their medicinal chemists and their traditional drug discovery flows and all of those assets, I would argue that AI right now is such a disruptive platform that it really is reducing, n…”
First Round focuses proactive investor support on companies' first 24 months
“I tend to be far more proactive during that first 18 to 24 months, where I think we've built up a skill set and a competency around those go-to-market muscle movements, around the hunt for product market fit, And then we kind of shift to be a little more react…”
Kopelman: Deal selection takes 10% of VC time, drives 80% of returns
“Maybe when you sort of look at the amount of time we spend in partner meetings and in diligence sort of doing the pick, it's 10% of our time, but it probably drives 80 plus percent of the return.”
Experiencing market crashes made Kopelman First Round's most cautious partner
“So, I think that it's probably made me the most cautious of the investors in the first round partnership, and that's not necessarily a good thing.”
Kopelman: Venture capitalists are paid to take risk, not avoid risk
“Having seen the pain that companies went through, that my friends went through, that founders went through in the dot-com bus, I've had to consciously try to remember that we get paid to take risk, not avoid risk, and it's one of the real strengths of having a…”
First Round flexed on valuation to back Square at $40M pre-money
“So when Jack was starting square and we met with him, he said, well, you know, if you thought Twitter was expensive, this is going to be even more expensive. And his first round was at a 40 pre and we learned our lesson and we were fortunate enough to be the S…”
First Round allocates roughly 50% of capital to initial checks
“Today, we're putting a little more up front. We're kind of back to where we started. We're pretty close to fifty-fifty, primarily because what we've seen is later stage valuations have increased Far faster and far greater than seed stage valuations”
First Round requires two-thirds majority vote for investment decisions
“As a partnership, we decide investments together. It's two-thirds. We don't need unanimity. No partner has a veto, and fundamentally, it's a pretty collaborative process.”
Kopelman: Partner meetings should focus on finding truth, not winning deals
“The goal isn't to sort of win, but rather the goal is to find truth. And a successful outcome could be when I learn something from my partners, and we don't invest in a company that I brought in, and vice versa.”
Kopelman: Founders spend under 10 weeks picking ideas they execute for years
“Most founders spend less than five to 10 weeks picking an idea. But they're going to then spend five to 10 years executing on that idea, and so if I had to give one critique of founders, like, the most common critique I give is I feel like they're rushing thei…”
Kopelman: First Round takes pro-rata in 100% of outside-led follow-on rounds
“Like first round, we pretty much tell founders when you get the first round, the second round comes free. We will take our prorata and a hundred percent of outside leads Second rounds.”
Kopelman: Founder community cannot be sprinkled into a venture firm post-hoc
“Virality is really hard to engineer and build in and you have to build it in from scratch. And I think that community is not something that could be Sprinkled in. Like, you really have to work hard, and it has to be part of your DNA, and it has to be part of t…”