The Ledger
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Bahat: VCs requesting early customer calls is a bad sign for founders
“VCs who ask founders to talk to their customers right off the bat, I tell the founder like, whoa, slow that down a minute. Like that's a bad sign about the VC that they want to go for the sanctum sanctum. Before they've even had a chance to build trust.”
Bahat: Startup valuation is primarily a mathematical function of VC fund size
“The way it works is your fund has a strategy and you say to yourself, do I want to invest in this company? And if I want to invest in this company, then I have a check size. And the check size is usually determined by the fund size, because again, back to our …”
Bahat: A founder's personal financial situation heavily drives startup decision-making
“The founder financial situation is one of the most personal financial situation is one of the most important and under discussed aspects of the life of a company, because it's going to drive so much decision making.”
Bahat: Revenue is a better startup co-investor than traditional venture capital funds
“My favorite co-investor is revenue. My second favorite co-investor is the founder of a venture-backed company in which we invest, and then you get to VCs.”
Horizontal black-box AI startups face severe go-to-market challenges without consulting
“The warning is, if you're startup is, hey, I've got a black box that does machine intelligence. Let me try to apply it to a bunch of different situations. Then I think the going is very hard. You know, you probably have to start with some consulting services. …”
Future human employment will be defined by demand for handmade goods
“What jobs will human beings do? Well, they'll do the jobs when other people want to buy something specifically because it was made by a person. And we have a word for this, which is handmade.”
Bahat: Startup valuation does not reflect how highly VCs rate companies
“A lot of founders believe mistakenly, in part because VCs lead them on, that company valuation is some kind of a marker of how highly the VC rates your company.”
Bahat: Asking VCs about pro rata is useless; ask about underperformance instead
“Founders often ask their investors, will you do your pro rata at the next round? It's, I think that's a dumb question because if there's a next round that's led by an outside investor, generally people are clamoring for their pro rata. To me, the better questi…”
The best startup ideas are highly polarizing, not consensus-driven
“The best ideas are highly polarizing, and so we've set up a model to try to harness their polarizing effect to make the best decision, which is to say we want to say yes when there is one person on our team who is very excited about it.”
First-mover companies consistently lose to those who build the best product
“I mean, I think we tend to be obsessed with first in the technology industry, and first loses to best every time. You know, the first iOS app companies were not the best iOS app companies, you know, platform after platform, and I think that's exactly what we'r…”
Roy Bahat: Founders should share sensitive data with VCs gradually
“You got to go gradually. I call it the egg toss. Of trust. You know, that game kids play where you stand near each other and you toss an egg and then you stand a little bit further away and you toss the egg a little bit further. That is to me, the model is I w…”
Roy Bahat: Bloomberg Beta is comfortable losing deals on valuation price
“We're very happy to lose deals on price. We need to be able to be deeply enough enmeshed financially with the winning companies to That we make enough to make up for all of the cases where we take risk and companies don't work out.”
Roy Bahat: Sequoia's culture defaults to expecting greatness
“I just go back to what I said about Sequoia generally, which is the habit of defaulting to expecting greatness is such a strong cultural pull.”
Method-only AI startups without specific applications usually end up as acqui-hires
“If what you're talking about is, I guess I'd call them method-only companies, you know, some technology that you think can be applied to a wide variety of situations, and you're not really building around any one of them, then yes, then I do think that is aqua…”
Early-stage investing requires finding one reason a startup could be an outlier
“What we look for is, there are a bunch of things that are tick boxes. You know, do we trust the founders? Are the deal terms fair? You know, is it in scope for us? But then really what you're looking for is, one reason to believe the startup could potentially …”