On this special segment of The Full Ratchet, the following Investors are featured:
- Chris Rizik of Renaissance Venture Capital
- Casber Wang of Sapphire Ventures
- Medha Agarwal of Defy
We asked guests to describe the biggest change to their investment philosophy over the course of their career
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:
0:18
Welcome back to TFR on today’s special segment, we ask guests to describe the biggest change to their investment philosophy over the course of their career. Here’s the special segment called rewriting the playbook.
0:37
On this special segment, we have Chris reisek of Renaissance, how has your philosophy or approach to investing changed over the course of your career?
0:45
I will say, with time comes confidence, and that is a big thing. I think there is some pattern recognition that comes with time, certainly a good amount. Probably the big thing is, I’ve learned to invest with conviction. And what I mean by that is there are going to be some great when I was a VC, great companies now, great funds, and I just don’t get it, or just, I just don’t see why that should work, and it’s going to work, but that’s okay. I’m okay with missing some of those. What I never want to do is the worst feeling the world is you invest in a startup or you invest in a fund because others have done it, you don’t necessarily believe it. And it turns out everything your spidey sense was right all along and you shouldn’t have done it. And now it goes That’s the stuff that keeps you up at night. It doesn’t keep you up at night that you missed a good deal. It keeps you up at night, that you invested in something you didn’t believe in. And that philosophically, is probably the biggest change, having more confidence in myself, and then having more conviction. And by the way, as we’re investing in funds, one of the key things we look at is their conviction. You know, if we see a fund that’s doing sort of a 50 spray and pray deals, and they don’t have any conviction on any that’s like, that’s not interesting to us. We want funds that have conviction, that are working the portfolio hard, showing the value that they add, and then being rewarded for their conviction.
2:18
Chris, sometimes this happens at the founder level too. Sometimes you have that spidey sense and you get a feeling something’s not quite right. After you’ve made an investment in the fund manager. How long does it take before you kind of know? And what are some of those signals that show up, maybe adverse signals that you know, start to show up and present and are not sort of the things that you want to see.
2:41
Yeah. I mean, the same way you all when you look at CEOs, one of the things you ask, you always ask, Are they coachable? Same thing with funds. The fund managers, they’re all way smarter than I am in what they do in their technology areas. But you know, I’m in 60 funds, and I’m talking to 300 funds a year. I got a pretty good sense of the market. And what’s frustrating for me is a fund manager that isn’t coachable. It’s not saying, Not say they have to do what I tell them, but they should at least listen to me and to other LPs when we sort of say, just so you know, what you’re doing is off market. And here’s where it seems to not make sense, and here’s the risk. The great managers, even if they are super successful, they internalize that they may do something different, but they’ve listened, and you’ll see how that sneaks into whatever it is they’re doing. They they’ve done that with that in the back of their mind. What is frustrating is fund managers who don’t listen, or who, to be honest, who maybe, even though you know they have a universe of one fund manager that they know, they they, they tend, they might tend to think they understand where the market’s going better than they do, and that can come you discover that often, pretty early
4:09
on, today’s special segment, we have Casper Wang of sapphire. How has your philosophy or approach to investing changed over the course of your career?
4:17
I think the biggest change for me is I do spend an incredible amount of time these days thinking about the founder I’ll be working with, and thinking about their journey, versus thinking about the outside factors I can control or get a better sense of right. I think early on, as a younger person joining the industry, all I cared about was things that I could control, right? Like, Oh, I get a great sense of what the metrics is, because that’s black wide. And then later on, sort of, I get better sense of what the customer calls are, what are the qualitative things I could control without really spending that much time thinking about the founder factor. And I do think that’s something that, you know, I’ve. Learn. You know, over time that really focusing on the founder themselves is is a very important thing. It’s not just my dynamic with the founder, but also, like my view on how this founder could evolve over time. Because, like we talked about, even before the age of AI, right? Like a great company, I’m talking about a public company or big m&a exit, the company is probably gonna evolve multiple times, right? Like they not gonna be the same when they have K employee versus 1000 so the founder has to evolve over time as well. So do I think this founder could evolve over time? And how do I think the founder would hire all these key questions make me just factor that in a lot more today and make me sort of want to build those relationships right. Like, way longer. I tend to start investing, you know, earlier and at Series B, but I try to build a relationship right. Like, sometimes they’re just a seed stage founder, I just swing by and then drop in, say hi, and maybe I’ll send them a customer. But I think like being able to kind of have a body of work of who they look at, look like, you know, when you’re three person and now they’re 300 like, are they true to their own philosophy? Are they true to what they said? Those are very important factors to me, perfect
6:21
on today’s special segment we have maytha Agarwal of defy, how has your philosophy or approach to investing changed over the course of your career?
6:31
Yeah, it is a great question. When I was really early in my career, I had some intuition, but I didn’t really trust it, and so I was very focused on metrics and traction and what I could analyze, and it was very intellectual. I think I made some mistakes and passed on some companies and maybe even invested in some that I had. I wouldn’t have if I had spent a lot more time focused on the founder their unique insight, their right to win and their ability to learn and iterate quickly. One of my previous partners used to say, with infinite time and infinite money, a lot more startups would be successful. But neither of those things are both of those things are true constraints. So in the constraints that we have and in the world we live, can do I believe this team is going to be able to learn and iterate and get to something that is valuable for their customers in a in a reasonable amount of time.
7:29
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.
