In the tweet the wrong date was not a red flag due to lack of detail as such, but because it signaled:
a) they had been raising for a while now
b) the recipient was not their first choice (ouch, you can hear the ego taking a glancing hit)
So ”the market” did not consider the startup investable, and they did not think about their sales pitch strategically enough … this VC would have liked to be sold to, not just a source of funds.
The implied peer signaling is the key thing here IMO.
Not to defend the VC in this case, but thin skin assumes that the VC did not take the meeting because they were offended by not being picked first. VCs and Investors are more often than not lemmings with strong FOMO bias, and perceiving no other VC is interested is enough of a signal to not waste time.
From my own experience having met with VC's and investors is that most are inundated with pitches, and the old addage of 'Take every meeting you can' has been replaced with 'Say No by default.' There is no exact science, and so there are proxy signals they use in their heuristic.
It reminds me of the scene in money ball where the scouts are complaining about a baseball player who does not date an attractive women, so therefore they should not sign him because he doesn't have confidence. https://www.youtube.com/watch?v=6naO8n6HsqE
> It baffles me that a person successful enough to get put in charge of an investment fund
Not necessarily ROI successful, though certainly successful in making connections to get the job. It seems, however, from their website that some of their capital made it into big companies. It's not clear whether they disclose the previous funds performances.
>How would you even function in the real world if you were so easily offended?
They DON'T function in the real world. Rich people, especially the uber new rich in SV do not interact with the real world, but rather with a purchased world from companies selling "lifestyle". They have people bring them groceries that they never see the bill for, because everything is handled by their accountant. They are thin skinned, so they surround themselves with yesmen to continually tell them they are awesome. They write trite, useless blog posts about "working harder" and their army of loyal sycophants eat it up.
> Is there any hard evidence that founders who secure funding earlier are more likely to provide a VC with a successful exit?
There really isn't much hard evidence about any correlative patterns about early stage VCs. Which is why their model is essentially spray and pray. The successful ones (Sequoias, a1z, etc.) are just signaling rods whereby high growth startups gravitate towards well known VCs, which in turns means signaling to M&A markets.
The charitable interpretation, especially for early stage investors, is that your investment will not be the last one necessary to realize a successful outcome.
If a company is having a hard time finding investors now, in the future when it needs more money it may fail for lack of takers, spiking current investments.
Sensible or cognitive bias that is in play regardless if it is sensible? I've seen a little research on jobs that discriminate against people not currently employed, with longer periods of unemployment leading to greater discrimination. I haven't seen anything about if this is actually justified or not.
I've also heard of this in other areas, like with date, but I haven't been able to find any research and the topic borders some controversial areas that research has struggle handling.
My guess is that it does happen as a bias, related to peer pressure and following a crowd, but like with other biases, even if it makes sense in some cases historically it will lead to illogical behavior in our current society.
This is the smart comment. If, as a VC, you know the outliers are hard to find, would you really get distracted by someone being on the market for 1-2 months?
> b) the recipient was not their first choice (ouch, you can hear the ego taking a glancing hit)
We can be as cynical about this part as we want, but I think what is meant here is that startups should try to raise investment from VC's or investors who are a good match. If I'm down to the 20th VC on my list - that list is sorted a way for a reason by the startup founders.
It's easy to assign this to ego but I think being a rational actor, it is also a signal like the pitch deck date.
Absolutely true I think. My intent was not to be too cynical (but feelings do matter though, especially if all you have are weak signals meaning you have to call it by gut feel).
Early stage vcs are successful when other vcs think the outcome is a good investment. Taking a bet that other VCs have already rejected will usually lead to a mixed payout.
a) they had been raising for a while now
b) the recipient was not their first choice (ouch, you can hear the ego taking a glancing hit)
So ”the market” did not consider the startup investable, and they did not think about their sales pitch strategically enough … this VC would have liked to be sold to, not just a source of funds.
The implied peer signaling is the key thing here IMO.