Batchu: Institutional VC requires a different skill set than angel investing
Sri Batchu · Wealth Creation For Employees Explained By Sri Batchu (Ramp, Instacart, Opendoor) I The Neon Show · Jun 20, 2024 · at 48:20
Sri Batchu (former Ramp, Instacart, and Opendoor operator) discusses the structural differences between individual angel investors and institutional fund managers with Siddhartha Ahluwalia.
0:00 / 0:21exact quote · 22.0s
▶ Watch the full episode on YouTube → 720p mp4 · rendered on demand · StarZero watermark
“The skill set of being a successful VC in terms of like pricing and winning the allocation, and also honestly building really high conviction to drive to a smaller, you know number of deals that you really want to win is a completely different skill set than being an angel investor.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Sri Batchu
Sri Batchu: Angel investing consistently underperforms index funds
“It's really important to know that it's a consistently underperforming asset class. Like you will make less money doing angel investing than putting your money in an index fund or almost any other kind of equity investment by and large.”
Sri Batchu: Prominent angel investors likely have poor returns under fund-style accounting
“Angel investors often tend to like overestimate their performance because when you see people that are like great angel investors, they're very selective in their disclosure of what deals they've done right on their. LinkedIn or Twitter, they'll have like, oh,…”
Sri Batchu: Power law dynamics disincentivize VCs from helping struggling startups
“Because of the power law dynamic, unless you're
A winner, a clear winner. They're actually not incentivized to work with you, which is the irony is like, okay, the person that needs the most help, they're least incentivized to help.”
Batchu: Enterprise AI is sustaining innovation favoring incumbents with distribution
“The way we're seeing AI being incorporated into a lot of businesses is that it's more of a sustaining innovation and not a disruptive innovation, if you were to use kind of Clay Christensen's framework. In, for example, in BtoB, it hasn't become a big enough w…”
Batchu: Winning allocations, not finding top founders, differentiates VC firms
“It turns out that that's not the most differentiating element for investors. Like, you know, because of the parallel dynamics of the portfolio of VC investment, you just have to have a handful of really good companies. Right. And there's the founders, the 10, …”
Batchu: People pursue VC for status and power, not helping founders
“It's a high status job. That's why they seek it. Right. And I think it's a lot of, Extrinsic motivation and reason as to why people want to be VCs not necessarily intrinsic motivation. I think they tell themselves, oh, like I want to help founders. But I think…”