On this special segment of The Full Ratchet, the following Investors are featured:
- Jake Yormak
- Ambar Bhattacharyya
- Katelin Holloway
Each investor highlights a situation where they decided not to invest, why they passed, and how it played out.
The hosts of The Full Ratchet is Nick Moran of New Stack Ventures, a venture capital firm committed to investing in founders outside of the Bay Area.
Want to keep up to date with The Full Ratchet? Follow us on social.
You can learn more about New Stack Ventures by visiting our LinkedIn and Twitter.
Are you a founder looking for your next investor? Visit our free tool VC-Rank and we’ll send a list of potential investors right to your inbox!
Transcribed with AI:
0:19
Welcome back to TFR on today’s special segment, we ask guests to discuss their anti portfolio, a startup investment that they passed on. Here’s the segment called Why I passed
0:35
on. Today’s special segment, we have Jake yormack of story ventures. Can you tell us a story about a startup that you pass on whether it was a good or a bad pass?
0:44
Yeah, I could tell you a lot of a lot of bad and a lot of goods. That’s part of the part of the business. A lot of passes, the worst part of the business too. I would say, when we have you want me to give you specific or you want me to give you, like lessons, whatever, the most memorable passes, whether it was a good or a bad one, I would say that our we, you know, we passed in companies that where sometimes we thought they were too hard and and maybe would require too much capital and too much patience and the that is all in the right decision. But when it’s been wrong, it’s been very wrong. So there’s one company that we passed on at the seed stage, it subsequently sold for a couple 100 million dollars. What I would say is that when we’ve been wrong, something usually changed in the world that we didn’t anticipate. So in this case, and actually in most of the cases that pop into my mind, it was covid. So in 2018 2019, even the beginning of 2020, we passed on deals, and then covid had like crazy implications that we never would have thought of around, let’s say remote work, around contactless checkout, because that was two of the ones that come to mind and it and then on top of that, we entered into this ridiculously frothy environment where companies were making massive acquisitions, companies were stacking and so for like, the biggest misses we made to date was when we thought something was too hard, and it probably took a combination of the world changing and a really frothy environment, but like, we were really wrong as a result, where we could have made, you know, our investors quite a lot of money, and we didn’t. I actually sat down for a coffee with the founder of one of those companies, the one that sold for a couple 100 million dollars, and we’d spent a lot of time with him at the seed stage. And I asked him, I said, let’s go back to the email I sent you when we passed. And then I called him as well, and I said, the conversation, what do you think of our rationale? Was it right? Was it wrong? What could I have done differently? And what he said was, he’s like, I don’t think you were wrong, like you were right. It was right on the edge. We could have failed so many times. And If covid hadn’t happened, and if the environment hadn’t been frothy, like, I’m not sure the company would have made it full stop. Now, he ended up getting backed by great VCs who supported him along the way, the market did change in the favor of the thesis of the company, and it was a frothy environment. And with all that, you and I both know he still could have failed in an infinite amount of ways. So to see the company through to that, to that acquisition, is just incredible impressive. And then every accolade you want to give. But what he said, which I think is fair, is the like, the rationale wasn’t necessarily wrong. And then the other flavor of wrong is probably when we really loved a founder and didn’t love an idea. And I’d say sometimes that just failed, and sometimes the founders pivoted and built great businesses. And the truth is I’m still not sure how to invest in that situation, like it comes up, and I’m really not sure what the lesson is to tease from that, because I don’t know if we guessed if we’d like be right, it probably just makes sense to when we have that tingly feeling of, like, feeling of that’s a really special founding team or really special CEO, probably makes sense to just make the investment, but it’s not clear cut. Yeah,
4:01
yeah. I mean, we see these these companies at a moment in time, and who knows what they’re going to pivot to after that moment in time.
4:15
On today’s special segment, we have Anbar Bhattacharya of maverick ventures. Ambar, can you tell us a story about a startup that you passed on?
4:23
Yeah, you know, one of the, one of the ones where, you know, I think back at and and I wonder, gosh, what was I? What was I thinking at the time? Was in the healthcare space, a company called one medical where, you know, I was at my former firm, Bessemer, Venture Partners, and we had met, we had the luxury of meeting, meeting that management team a number of times. And my own background, I used to work in a clinic setting. I used to work at Minute Clinic. And so I really understood, like the four walls, you know, economics and how technology would would integrate in and I saw. One medical story, and sometimes, sometimes, when you’re so deep into understanding, like, how the operations work and what needs to happen, you’re able to collect, connect with the management team on a real fundamental basis, but also just see, like, oh my gosh, like, there are so many obstacles along the way. So I really fell in love with that business. But I, you know, given, you know, given the, you know, maybe I was too close to the sun on that one where I was like, gosh, like we had to, we did jump through all these hoops. I never jumped to being like the full believer there. But very luckily for me, you know, when as I switched to, as I switched to Maverick, nine years ago. Maverick was an early partner with with one medical and so I got to see the second half that story, which, which was, which was great for me. And so when I think about my anti portfolio, definitely, definitely, you know, missed a mark on that one, but at least got to, got to see it the rest of the way
6:02
on today’s special segment, we have Caitlin Holloway of 776, Caitlin, can you tell us a story about a startup that you passed on whether it was a good or a bad pass? This is
6:11
a good point. Okay, I’m trying to think of the year I passed on SpaceX as an angel, and it was, I’m trying to figure out the year, but it was the TLDR is it was too rich for my blood, but it was an opportunity that I got. I want to say it was like 2019 it was just before covid, and right as I was about to transition into being a full time institutional investor, and the opportunity knocked on my door from a very unexpected place, from someone that I very much respect and wanted to impress, and I knew that it would probably look really good in my portfolio, but it was so freaking overvalued I thought I think It was at like one and a half billion. I can’t remember exactly, but it was like, I was like, Maybe I’m an idiot. I like, there were so many reasons where I should have Coulda, Woulda, and what’s it sitting at now? Like, 6 billion. I don’t track it because it makes me sad. There you go, yeah, there you go, getting
7:19
an angel check in the billions it? Yeah, that’s a tough one.
7:23
It didn’t make sense. But I also, I it is one of those dumb ones that I’m like, would that have changed anything? But it was, it was so late stage and not in my, my, my wheelhouse. But I it is one that I think about. It’s like going shopping and not buying that thing that you’re like, I’ll sleep on it, and then going back the next day and it’s gone, and you’re like, Oh yeah, sorry, I think about SpaceX, yeah.
7:53
That will conclude this installment of investor stories. If you’re enjoying the program 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.
