The Ledger
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Stebbings: 78% of the time VC follow-on reserves are misallocated
“When you actually look at the data, and we have probably the most data across, I think almost anyone, we have 2700 GP track records, and when you look across that data set, 78% of the time reserves are misallocated.”
Stebbings: Europe Has Many Dangerous VCs Who Know Nothing Yet Interfere
“And then there are the really dangerous investors who think they know everything but actually know nothing and want to do a lot. Big cross. Worst of the worst. Europe has a lot of them, sadly.”
Stebbings: Small VC Platform Hires Are Ineffective Compared to Top Firms
“Andreessen have hundreds. They're actually very deep across every segment of hiring, across every segment of B to B customer acquisition. They are a machine. Insight is the same. We have Insight who've done our companies, and it is a machine that they roll in.…”
Stebbings: Multi-stage VC employees must chase hype deals to get promoted
“If you are a strategic person in a multi-stage fund, getting into one of these hot deals is what's going to get you the promotion. Doing the slightly off the beaten track, but amazing company that might take three or four years to get to product market fit, or…”
Stebbings: Many micro VC funds funded by founders will die
“I think we'll see the death of many of the micro funds, the funds that raised from founders, public market founders who now have had their net worths crushed.”
Stebbings: 20VC Never Makes Follow-On Investments to Eliminate Signaling Risk
“We remove signaling so we don't ever do follow-on.”
Stebbings: Founders should pitch VC firm founders to avoid orphaned investments
“And that's why I also really like, and I always push people, work with the founders of firms. They ain't leaving, number one. You're not going to get orphaned. They're not afraid to take these courageous bets. They're not getting fired by other partners.”
Stebbings: Startups Raising Over $5M at Seed Have Consistently Performed Worst
“I've done a 170 investments in 10 years. And we analyzed performance across them, according to actually how much they raised at the seed. And consistently the worst performing companies raised five million or more at the seed round.”
Stebbings: The Recent Generation of Tech Employees Is Entitled and Poor-Performing
“I, my worry is that actually, I think there's this generation of kind of entitled, but also pretty crap team members.”
Stebbings: Mature founders navigate downturns better than volatile young founders
“The mature founders, the fathers, the, and the mothers, and the more mature minded are weathering it well.
They know that if their child gets sick, it's going to be much worse than a recession.
But the young, young founders, their volatility is very extreme.
I…”
Stebbings: LPs penalize VC managers who missed chances to return DPI
“On the re-ups, from what I understand, and I speak to a lot of LPs, if you had the chance to produce DPI last year, and you didn't, you're in the bad books.”
Stebbings: VC funds with heavy reserves are misaligned on round valuations
“If you have actually a very heavy skew towards reserves, Actually, we're not aligned, because that new round that you're getting, I don't want it to be that high, because I want to double down and put more in. It's much more beneficial to me that it's lower.”
Stebbings: Early-stage VCs should roll off startup boards by Series B
“I always want to roll off the board. As you said, you shouldn't have five investors on the board who generally don't have that much of a different perspective. If at the Series B, not that much use for me to be there, really. If the founder wants it, fine. Abs…”
Stebbings: Offering 10% dilution prevents startups from attracting top-tier VCs
“So if you come to a venture market with a 10% dilution round, you're not gonna get the best venture investors in the world to partner with you, because you're gonna be giving it max eight percent away, because there's gonna be two percent for angels, maybe eve…”
Stebbings: Raising Capital Pre-Launch Is Often Easier Than Post-Launch
“Walt Disney is sell me this story, make it magical, and make it wonderful. That's your pre-seed and your seed, and then you need to know when to sell me the pen. And there is a very rude transition between the two that I think will catch people up, and I think…”
Stebbings: Pitch Decks Should Explicitly List Reasons Not to Invest
“One slide everyone should have on their deck, I think, is three reasons why you should not invest in us today. And then say, our, I don't know, our sales cycle is too slow, give the data. Our net retention number is too low, give the data. And then on the next…”
Stebbings: Pedigreed tech founders can raise $5M at $20M without pre-seed
“I don't think pre-seed actually exists anymore, bluntly, for the majority well, not for the majority, but for a lot of founders, whereby if you come out of a top Facebook, Twitter, Datadog, Slack, you name it, you can raise, you know, three to five on 20 like …”
Stebbings: Seed checks under 2-3% of VC fund size are pure optionality bets
“Does this multi-stage fund care about me enough? Am I meaningful enough in proportion to that fund size? So it's like, what portion, what proportion of that fund size is this check? Sub two to three percent. Honestly, it's a total optionality bet.”
Stebbings: Founders should construct their cap table like a sports team
“I would just say that build your cap table like you do a sports team. Everyone has a very specific position. A left back, a right back. Have someone for PR and marketing. Have one for engineering and recruiting. Have one for fundraising. Have one for pre-produ…”