On this special segment of The Full Ratchet, the following Investors are featured:
- Gregory Ho
- Oren Yunger
- Laura Chau
Each investor highlights a situation where they decided not to invest, why they passed, and how it played out.
The host 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.
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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 Gregory ho of Spring Mountain Capital. Greg Can you tell us a story about a startup that you passed on?
0:44
You know, we pass on things because the objective is not to fund everything. Objective is not to fund something that ends up wasting a lot of people’s time, and some things that we don’t fund might turn out really well. So we’ll hesitant to say exactly the kind of company, but one company that we find that we don’t fund is someone that we can’t enter into a dialog with. So the in the due diligence process, I’m very frank. I don’t dance around and ask softball questions, nor does my team, we ask hard questions, and we’re there to observe the answers, and we train individuals have the answer right? Do we detect defensiveness if we find a way to interject? What is the dialog? Even if our suggestion is not, you know, might might be disqualified for legitimate questions. What is the temperament of the individual in terms of asking that question? In terms of asking a question, we know that there’s a specific answer and a pivot to hide the truth of what we’re getting to so the we have unteen questions, and you don’t have to go and pass every single one, but if you, if you fail on 70% to make us feel that, that you are forthright, don’t think that you know everything are humble to enough to accept us as value added partners, ie not just because of money, but because we might be interesting people to help you form your business, we’ll do that and and surprisingly, you know, people seem to get trained. You know, you ask questions. Say, Oh, that’s a good question, even though it’s a stupid question. Oh, that’s good question. Just program that seemed like they’re open to input. No, no. You get to ask that question, and, and, and it’s generic, because, rather than personal, I’m not going to do that if you’re trying to advise a founder, be humble. Understand if that person can add value, and you really don’t want to talk to them, you shouldn’t take their money either, really, yeah, so both ways. So example of companies, and it happens more often than you then think even ones that come out of great incubators that teach people how to deal with questions and so forth, you can’t do that. So it’s a team. The team is really important. So you know, when you go into this area, you have to have the belief that you can shape a good idea in foreign but you need to have the team. But that’s why we also start earlier
3:35
on. Today’s special segment, we have Oren younger, of notable capital. Oren, can you tell us a story about a startup that you’ve passed on for sure?
3:44
Yes. So a company I passed on, this company called sneak I met the founder, Kyper. Journey in 2018 I couldn’t get behind the solution for securing Java open source, so open source packages or that developers can drive decisions for security, but I’ve since learned from my big mistake in 2018 that startups need to have big vision, but small steps. So guy always had a big vision, but he said, I’m going to start with JavaScript, Java open source packages, but I’m going to grow into being application security for for everything, and also the developers can impact and can drive decisions in areas such as security. Those are two fundamental changes that I had as consequence for my misjudgment of guy’s company, tough mess.
4:41
On today’s special segment, we have Laura Cho of Canaan, Laura, can you tell us a story about a startup that you passed on so really
4:48
early in my career, I met the founder of ring the doorbell, and I remember the time I was so fascinated by it, the i. Founder, Jamie was a really good storyteller. He was on Shark Tank, actually, but it was one where I couldn’t get out of the fact that it was a doorbell. Internally, I think it, it felt kind of silly to talk about it cycle. We’re gonna invest in this doorbell. Like houses have doorbells already. Why do you need like a smart doorbell? And Jamie told the story around around security and communication and all of that, but I just, I think I was in my head about, you know, it’s a doorbell. And fast forward, he sold to Amazon not that long after, for close to a billion dollars, or maybe above a billion dollars. And it was a good lesson for me to just really think about the fundamentals of the business. And actually, I met another company recently, or I had that same feeling. It’s, it was a company called Bird buddy, yeah, not doing tremendously well, but it’s a smart bird house, right? And people love this thing, and the engagement is crazy. The the it’s a fantastic business, but I had to fight that again. I was like, am I evaluating this? Just because? Am I nervous about it? Just because it’s a smart bird house and it’s that ring one I always think about this. Music
6:23
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.
