On this special segment of The Full Ratchet, the following Investors are featured:
- Jon Terbell and Ted Clark
- Jay Patil
- Mathias Schilling
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 Ted Clark and John turbell of four bridge partners, Ted and John, can you tell us a story about a fund that you passed on?
0:44
Yeah, it’s a little bit of a painful one. There’s, I won’t name it, but there’s a venture fund in the market today that is probably a top three, maybe top five franchise in venture and a long time ago, back in the mid 90s, I had the opportunity at what was then Hancock Venture Partners to invest in their fund, one which was a monster success. And there was another call. I was a junior person then, but it was another partner and I were trying to get the deal done. And really because of the process, and in my view, the old fashioned nature of what even we were doing at that time caused us to turn that down. And you know, a Had that been part of the harbor best portfolio would have moved the needle for the firm. And so making that mistake, even though I was an advocate, but as a firm, we chose not to do that emerging manager with experienced people who had a track record. That is a core principle and a core tenet of our four bridge strategy, which is experienced, proven folks who are doing something new that they’re passionate about is the center of the fairway for the managers in our portfolio, do you have,
2:02
like, a guideline around process? You know, I’m a process guy. We have a process. Sometimes you gotta break it right when the right founder shows up. Like, how do you think about, you know, systematic investing, but then also being flexible enough to jump on, you know, great
2:19
opportunities. Yeah.
2:20
I mean, I think that’s one of our strengths, in that, you know, we as keys, have the benefit of a forward looking calendar, right? Not everything is down to the exact day, but when you’re working closely with managers and you’re constantly communication and you know what’s going on, you have a pretty decent sense of when they’re going to need the next fund. And so we can map out our portfolios, sort of in bulk, over long periods of time, and think about adding relationships that we can develop again over years, right at the same time, every time we, you know, push out, start investing new vintages, we always will leave room for one or two things, right? And so, you know, there’s not many cases where we’ve pulled that trigger, but the whole idea is to have a very institutional program here. We have a very repeatable process, but we’re also nimble enough to take advantage of opportunity when we see it. So yeah, I think time is our biggest, biggest asset, in terms of being able to stay very disciplined in our process.
3:27
On today’s special segment, we have rusty Ralston and Jay Patil of swell VC Guys, can you tell us a story about a startup that you passed on?
3:36
You know, we’re not going to name names, but we’ve passed on quite a few companies, and they’re doing the bubble just like insanely, like, stratospheric valuations. The market was like, full on, right, zurp mode, rocket mode. Call it what you will. Startups are raising at these insane numbers, and it’s really all about optimism more than reality. And it was tempting. You know, we’ve dodged a lot of those bullets. We stuck to our discipline, and fast forward to now. What a lot of those companies might still land the moonshot right could happen. Others have already had their crash and burn moments. Maybe we passed on several companies where there did no longer exist within two years, within three years, within four years, of us saying no, within the same fund cycle, because a lot of these companies have no real path to sustainable growth, no real path to revenue, no real traction, even in those earlier coin toss toss, right? Are they going to be the next unicorn based on the next round they raised, or they flame out completely because they didn’t really have any underlying business models that were real or durable, and we’ve seen both outcomes play out, right? No hard feelings. We wish them the best, but it’s well for really for us. It’s like still as a focus in the founders, building for the long haul, solving real problems and not just riding any hype waves.
4:49
On today’s special segment, we have Matthias Schilling of headline, Matthias, can you tell us a story about a startup that you passed on?
4:57
You know this guy did me? I mean, unfortunately. It. Every venture has to start companies that he passed or she passed on that are probably bigger than than we made. You know, I did pass on Google. I did talk to the founders at the time, wow. We were backed by Bertman, and at the time, the model was still to power her websites. And so I had good distribution in Europe, and I tried to and then I, was young and clueless, and I passed because of competition, you know, there was Alta Vista, there was excitement, there was about 10 other search engines, you know, I will say, I mean, intuitively, you know, I did feel immediately that product was much better than anything else. And so I should have listened to that intuition, whether they would have taken my money is a different thing, but I talked to both of them at the time, and it was before this year’s eh amazing
5:54
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.
