Insight
Venture returns depend on company quality, exit ownership, and entry price
“In our business, I think three things matter in that order. I think number one, it's a parallel business. So you've got to be in the best companies. A few companies end up driving the returns, whether it's for your fund or for the industry, and you've got to b…”
Opinion
One AI-assisted software engineer can now do the work of 20
“Now one engineer can do the job of 1015, 20 engineers, right? It's only getting more, it's only getting better. That's great. Right? That's great. That's great. Maybe one senior engineer who's not cheap here can suddenly do the job that, like, you might have n…”
Opinion
Jain: Venture capital firms keep the same strategy for decades
“Venture firms kind of have the same products, same go-to-market, same strategy for decades.”
Disclosure
Afore Capital passed on Ramp's first round over its $25M valuation
“And then I believe like a year later, they came to us and they said, Hey, we're starting this new company called ramp. Obviously we loved them. We thought very highly of them. And the idea was interesting as well, but given the repeat founders their first roun…”
Disclosure
Afore Capital created a non-core bucket to back pricier repeat founders
“So now we added what we call a non-core bucket, right? These are investments that we would have loved to make them core, but for whatever reason, it's out of spec. It generally is because of deal terms. It's out of spec, and it's usually repeat founders, right…”
Insight
Gaurav Jain: Venture capital is fundamentally a sales job
“In reality, it's really a sales job, right? You're selling people to take a meeting with you. You're selling people to take your money”
Insight
Jain: Multi-stage venture funds cannot do justice to early-stage startups
“The moment you become multi-stage, your focus shifts, and you're not able to do justice to that zero to one journey”
Disclosure
Jain: Afore Capital only requires one team member's conviction to invest
“A lot of the deals, we debate them internally a lot, and as long as one person is excited about it gets done. It doesn't have to be a consensus deal. No, only one person on the team has to get really excited, and obviously my co-founder and I you know, can do …”
Assertion Not checkable as stated
Gamma has negative lifetime burn and holds more cash than raised
“Companies like Gamma, they haven't raised much money in the life of the company. In fact, they have what they call negative lifetime burn as a term I had never heard before, but it's a new term I've learned, which is they have more money in the bank today than…”
Assertion Not checkable as stated
Pre-seed was originally a negative label for failed seed fundraisers
“When we started Afford 10 years ago, this year will be 10 years for us pre-seed, which has now become a category, was not a category back then. You know, it was actually a negative term, right? It was reserved for founders who could not raise a seed round, and…”
Assertion Supported
Sequoia Capital acknowledged entering pre-seed investing with its latest fund
“In fact, when Sequoia launched their most recent fund, they said, I guess we're now Presteed investors, too.”
Insight
Jain: Pre-Seed Investors Must Back Founders Committed to 10-Plus Years
“In most cases, it's 10 plus years, right? And I think founders have to really, you have to be, you have to believe that the founders want this to be their last job, right? If this is working well, this, they're just going to keep, keep going with this versus l…”
Insight
Jain: The true constraint in startups is talent, not capital
“The constraint actually is not capital, as I've realized over time, there's a lot of money in this world. The constraint is talent. Right. There's a lot of people who want to start companies. So that's not the constraint. There's very few people that are reall…”
Disclosure
Solana pitched Afore Capital at a single-digit valuation as Loom Protocol
“The founders of Solana when it used to be called Loom Protocol, believe it or not, we're actually in this office here that you're sitting in today. I think the first round might have been at I don't know, the high single digit post money, maybe low double digi…”
Insight
Jain: Exceptional early founders are detail-oriented, not top-down thinkers
“They're really deep in the details. You know, they're not top-down thinkers where it's like, well, you know, the McKinsey study said this market will be big, so that's what we're getting.”
Insight
Afore evaluates early-stage founders by extrapolating their six-month learning velocity
“One of the questions we ask is just, like, walk us through the, like, the last six months, right? How many customers have you talked to? What have you learned, right? How's the product changed? How's your thinking changed? Because again, I'm trying to extrapol…”
Insight
Jain: Great founders balance truth-seeking with extreme optimism
“It's a weird like dichotomy, right? Because at some level you want them to go search for the truth and not be happy ears. At the same time, you need to be outrageously optimistic to build a business, you know, because it's going to suck along the way. And for …”
Insight
Jain: Great founders convince talent to join despite lower pay and risk
“I want them to be able to convince people who in a rational world would not be joining your company to be able to join your company. Right. Because you're going to pay them less. You're going to make them work more. There's more risk with this company, but the…”
Disclosure
Jain: Afore Capital's biggest mistake is falling in love with ideas
“The biggest mistake I'd say we probably made is like fell in love with the idea, right? Where, where it's almost like you think, like, if I was building this company, I would, I think it's gonna be really big, but the reality is we're not building the company,…”
Assertion Supported
Afore Capital holds Cursor stock through its acquisition of Koala
“A company comes to mind called Koala that we invested in repeat founders, I believe, on a segment that was a pretty expensive deal for us to get into. They were doing well, they raised a series A, and then they actually got acquired by Cursor, and we got Curso…”
Assertion Not checkable as stated
Jain gets more deal flow from rejected founders than portfolio founders
“I get more deal flow from founders who I have said no to, who I passed on, than founders who I've invested in, right?”
Insight
The funding round after pre-seed remains 90% storytelling and 10% data
“If our round is hundred percent storytelling, zero percent data, the next round is still 90% storytelling and 10% data.”
Insight
Jain: When two pre-seed founders fundraise, business operations effectively halt
“Like, if you think about it, there's two founders raising a pre-seed, and they're both fundraising, or meeting investors, Nobody's writing code. Nobody's selling to customers, right? The business is essentially shut down for the purpose of fundraising.”
Assertion Not checkable as stated
Jain: Historically 70% of VC capital went directly to hiring engineers
“Historically, 70 cents of every dollar we would give as VCs to founders would go towards hiring engineers, right?”
