On this special segment of The Full Ratchet, the following Investors are featured:
- Craig Shapiro of Collaborative Fund
- Kyle York of York IE
- Somesh Dash of IVP
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 Craig Shapiro of collaborative fund, Craig, can you tell us a story about a startup that you passed on?
0:44
Sure I, I mean, I feel silly, because I feel like there’s lots and lots of people who who probably have shared this one, but Dave Shen, who was one of the earliest employees at Yahoo, and he was early, this is, you know, 15 plus years ago, but he was involved with betaworks in New York. He showed me Uber at their seed round. They were raising 750k at a $4 million valuation, and I passed. So that was obviously, you know, a bad decision, but I passed because to me, it felt like it was, it was solving a problem for wealthy people, you know, I was, I was like, you know, only, only wealthy people take private cars. Like, I’m a, you know, I’m a, at the time, there was an app, I don’t know if you remember, called taxi magic, yeah, in San Francisco. And I was like, I’m happy with taxi magic. Like, why do we need, you know, black cars. So anyhow, that’s probably my that’s an easy kind of anti portfolio. That’s a tough one. Yeah,
1:56
on today’s special segment, we have Kyle York of York, ie, can you tell us a story about a startup that you passed on?
2:03
I passed on this company called ad hoc, back in 2015 2016 it was an ad tech play, and I just had an angel investment go south in another ad tech play. So it’s just like cold on it, but I love, love, love the founder. Just a few months ago, that company rebranded. They were an ad tech play doing automated ad delivery. They actually established and pivoted to be a SaaS platform for the flooring industry. And that company rebranded as broad bloom, and just recently had a great exit to a firm called sinkly. It was one of these ones where I knew the founder would figure it out, but I just was called to the industry. So he circled back around one of our clients now actually on advisory, but they circled back around and were basically like, hey, you know you were right. The reason you passed, you didn’t like the space. You thought it was overheated. I didn’t think of it till now, but followed you over the years, and we kind of pivoted and picked the vertical and owned it. It led to this, right? And it kind of was like, man, but I still wish I was on that cap table. It felt good to hear the story, but I would have loved to been on the cap table.
3:02
You on today’s special segment, we have Somesh, dash of IVP, Somesh, this is the anti portfolio question. Tell us a story about a startup that you passed on
3:12
when I started. I used to think it was more painful when you picked the wrong company. But the greatest thing about venture capital is that it really celebrates making taking risk and understands when you fail, and that’s part of the process actually like, what other economy environment can it be where someone can fail in startup one and immediately get funded for startup two and actually get higher caliber people higher valuation? It’s kind of unbelievable, if you think about it. The anti portfolio is probably what keeps me up the most at night, because you you very there’s very few truly transformative companies and founders, they’re, you know, Andy Ratcliffe, my former professor at Stanford, you know, used to always say there’s typically five to 10 every year. And so it’s rare to find those five to 10 and even get a chance to meet them. And then when you have an opportunity, they want to work with you, and you say, No, it really is painful, because you’ve done a lot of the work to mutually vet each other. The one that comes to mind for me, because I just admire the founder and the company so much, and I’m a big user of it is DoorDash. I am a huge fan of Tony and the amazing team there is co founders, executive team. I had the opportunity to meet Tony early. Our paths crossed, both from the kind of Berkeley, Stanford, GSB, and then when you start in DoorDash, there was a round specifically, though, where it was not obvious. DoorDash was going through a pretty heavy investment period. One point, I think their gross margins were actually negative. And I had a chance to spend two weeks with Tony and really dig into his vision. And I just couldn’t foot, I think the current economics with kind of what we needed to believe to get to the valuation that they ultimately got from another firm. But that one sticks up, because Tony, back to my earlier point, is one of those founders who I’ve seen evolve and mature and is one of the all time great leaders in Silicon Valley. And I just think his ceiling is almost astronomical. He’s going to just keep going and build. An unbelievable global business, and I’m just it would have been so fun and wonderful to be part of that journey and profitable
5:11
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.
