Investor Stories 350: Lessons Learned (Spreng, Jensen, Edelson)

Investor Stories 350: Lessons Learned (Spreng, Jensen, Edelson)

On this special segment of The Full Ratchet, the following Investors are featured:

  • David Spreng
  • Larsen Jensen
  • Alex Edelson

We asked guests to tell the most important lesson they’ve learned in their career.

The hosts of The Full Ratchet are Nick Moran and Nate Pierotti of New Stack Ventures, a venture capital firm committed to investing in founders outside of the Bay Area.

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Transcribed with AI:

Welcome back to TFR on today’s special segment, we ask guests to tell the most important lesson that they’ve learned in their career. Here’s the segment called Lessons Learned.

On today’s special segment, we have David sprain of runway growth. David, can you tell us the story of highlighting a critical lesson

that has changed the way that you invest? This is quite deep into the sausage making, but I would say to be ultra, ultra cautious on hidden technology risk. And we’ve we’ve gotten burned. And you know, and luckily those burns weren’t severe. And they they went away nicely. But where we thought we had adequately diligent the the risk in the technology and in the two cases I’m thinking of they’re software companies that were coming out with new generations of their software, they were already in the market, they already had customers, the customers raved about the product, you know, and we’d say stuff like we can’t live without this. But then they would say and especially with the features that come with the new release. And and and then we would talk to the sponsors about how sure you this new release is going to work. And they would say we’re very confident in fact, we even hired somebody to go do a code review, and everything is great. Well, when the when it was ultimately released, it didn’t sing and dance the way that the company said it would. And it resulted in more churn than expected. So that that has just taken our bar that much higher on technology risk, is that, you know, one of the most important mantras in our business is no binary risk, meaning no risk that could cause this thing to go away. And if if you fail to deliver on promises and features in your software, and your clients start firing you that could be existential. So in on the one hand, you know, it kind of sounds like, you know, that’s motherhood and apple pie for somebody in our business. But the lesson learned is, even when you think you know what you’re doing, and even when you’re, you know, professional, you just need to go another layer deeper.

Today’s special segment, we have Larson Jensen of harpoon ventures Larson, can you tell us a story highlighting a critical lesson that has changed the way you invest? Yeah,

I got a lot of those to our topic of what do we want to invest in and why we want to invest in defence SEC second, or national security or government second versus the primary market is I’ve seen how hard the sales cycles can be. I’ve seen it all go wrong, where we’ve lost all of our money in a specific company, when even though we knew what the budgets were going to be, we knew the stakeholders, we knew all of that. And we were doomed by a continuing resolution. And you get stuck in this no man’s land, where new money to invest in the business doesn’t want to do so unless they know for sure that that contracts actually going to occur. But you can’t say that when there’s a deadlock on Capitol Hill in a budget is not getting passed for new starts. And ultimately, we’ve had companies that have gone out of business during that timeframe because they couldn’t raise the incremental capital they needed to keep the lights on. And ultimately, the budget gets passed a few months later, and they would have gotten that deal. But the company wasn’t around any longer to achieve it. So for me, I think that’s one of the the highlight reasons that we like to invest in commercial technologies first, or have a capital capital stack that we’re invested with in a specific company that is understanding of these, this the intricacies of this market, so that we can manage through some of those timeframes. And in those other situations that I mentioned, we didn’t have either.

On today’s special segment, we have Alex Edelson of slipstream. Alex, can you tell us a story highlighting a critical lesson that has changed the way you invest? Yeah,

well, I mean, one that comes to mind is just like the importance of building relationships over long periods of time and you know, We all meet folks sometimes who are not raising they may not be raising for years. And it’s tempting to be like, oh, let’s just come back in years. Let’s pick this up in a couple of years, like when you’re raising and like, that’s not, I have found that if you build relationships slowly over time, like by the time you get there, it is much more likely you’ll get an allocation, if that’s oversubscribed, you’ll know a lot more about them and their strategy. And it’s a real relationship at that point, like you really want to work with each other. You may like hopefully, like you care about each other, you know each other, you respect each other before the fundraise even started. That’s like a great position to be in. For me. I want to talk to them before I want to build a relationship before and there’s one case where yeah, like I thought I’d never get any, I never get an allocation in this fund. It wasn’t going to grow much. It’s way oversubscribed. It’s been successful, despite being you know, on the first few funds and but we just built a relationship over like two year period. And we were really fortunate to get an allocation in that fund even though it was like heavily oversubscribed but you know, it was driven by a personal relationship. And it just drove home for me like this is a relationship business. And like, I knew that when I started but like that was kind of an extreme example of that, like if I didn’t build that relationship over years, I don’t know that I get into that fund amazing.

That will conclude this instalment of investor stories. If you’re enjoying the programme and would like to see it continue. Take a moment and leave a five star review in iTunes. Okay, that will wrap things up for today. Until next time, over prepare, choose carefully and invest confidently thanks for joining me