Not going to explicitly rank the things you've listed, but I can talk about what you're getting at in general.

We look for a few things in particular--
(1) Stage - we invest post-seed, so we (with a few exceptions) do not put the first money in. The company is generally trying to raise a Series A.
(2) We look for a company that is willing to take a small A. This minimizes dilution for entrepreneurs (and therefore gives them stronger incentives). They typically raise $ again 12 months after at a significantly higher valuation, after hitting some key milestones. Lots of companies will raise 5MM on 10-15MM pre-money, giving away 25-33.3% of the company in addition to what they've already given to angels/seed funds, promoting a situation where they need a really large exit for it to be a big personal result (for the entrepreneur). A founder who cares far too much about the valuation of their round is generally a bad sign. We want to avoid companies who would take a 7MM valuation at any terms vs. a 6MM valuation at very founder-friendly terms.
(3) Traction - need to have demonstrated product-market fit
(4) Good previous Institutional Partners - this is generally the angel/seed investors that came before us
(5) Syndicate - if we're not taking the whole round, but are going to lead it, we need to find other VC funds who would be willing to invest in the deal with us. Every fund has an MO as far as what they will invest in. It can be as simple as "network effect businesses", but we pick and choose based on what we know and have learned working with other funds / analyzing data about other funds.

Beyond that, it comes down to a lot of the things you mentioned. Team of course is highly important because startup success is more about execution than the actual idea.

Tried to give a good answer here but feel free to follow up on this. In general, early stage funds like ours are working differently compared to a Kleiner/Sequoia type fund that's investing in more mature companies with more data/more of a track record to go on.

These funds also have raised so much capital that they need to be writing pretty large checks to deploy it. As such, they often compete with each other and drive valuations up to ensure they win the round, which is very good for the people who invest before them.

Econ/Math from WashU in Stl, graduated in 2013 with honors.

Congrats! Did you consider anything like consulting, financial analysis, MBA, trading?

Consulting/financial analysis: no

MBA: yes but 0 interest in paying, and little interest in going either. I just see it as paying for a network/resume boost and on principle I'd prefer to just "learn on the job" rather than do something that seems unnecessary to me but necessary to the less progressive employers.

Trading: considered out of college, had little interest after checking it out, though

also interested if you wouldn't mind pm'ing me

Mossberg: Maybe start a new thread or something? As far as building a future-proof skillset, other than coding, there are now a few Data Science online courses like this https://www.coursera.org/specializat...udatascience/1, which the NSA now even counts as one year of work experience.

Gull, jalex:

Here are three common ways that happens:

1) Founder liquidity in hot VC deals. Usually late stage, but sometimes earlier if the deal is very hot. The way this works is let's say you're doing a $100M raise at a $900M pre-money valuation. Investors would like to buy a little more than the 10% they get, and founder (and sometimes early employees and investors) would like to see some liquidity. Let's say after the raise the founder would have a 20% stake valued at $200M, he may sell of 5-10% of it to investors for $10-20M.

2) Cash-flow focused private equity. These often call/position themselves VC firms, but they are pretty different. They tend to love businesses that have medium revenues (say $5-20M) and are profitable, but not growing fast enough or big enough market opportunity to be attractive to traditional VC. These businesses are often bootstrapped and have founders eager for a cashout. The valuation multiples are far lower than traditional VC and much closer to public market multiples. The existing management team usually continues running/growing the company.

3) Search funds. These are similar to #2, but they come with a new CEO and sometimes a new management team. The way these work is someone creates a thesis for a specific type of company to run. They get investors to back them for an acquisition of a company that has the required core technology, customers, etc. Then they do a partial or total buyout. In a partial buyout, the founder may still be involved as a significant equity holder and key member of the team.

Hey Diablo,

Thanks for the reply. We definitely hear from #2 and #3. We're pretty content to continue to grow the business, so we really haven't ever had a serious discussion. It's always pretty flattering to get a phone call and get told what a great little business you've built.

Would love to catch up sometime and hear how you're doing.

J

Two Shae,

what makes you think that working within finance is not wasting your life? This is a serious question as I understand what you felt about poker and I do the same. However, switching to something else which is purely about money and ROI does not seem to be the right step for me.

I really want to work within the society in a social part of it. Your path seems to be too money oriented but perhaps the reason is because your uni/college background is finance mainly?

Hey,

Definitely plan to post a long update in the near-ish future ITT but to answer your question (@insyder)--

The awesome thing about VC specifically within finance is when done right, everybody makes money-- entrepreneurs, LPs, and venture capitalists. Society also wins as value is created in the form of companies that offer valuable goods/services and provide jobs. It's far from sucking value out of a zero sum game like poker or trading etc.

VC is highly social as well. To each his own though.

Without VC we wouldn't have a ton of stuff we already take for granted. Just within the past 5 years, we've had companies like AirBnB and Uber completely disrupt existing players and offer extremely useful services to consumers. 5 years ago, very few could have imagined that you could rent out your empty apartment by the night when you wouldn't be there-- to a complete stranger. All of a sudden that value can be unlocked. It's very cool and refreshing to be around people who have (and fund) these sorts of "crazy" ideas. Or even ones that are not crazy at all but solve some sort of pain point for a lot of people.

If we're talking about 30 different AdTech companies all doing pretty much exactly the same thing, it gets pretty boring and stale.

Besides the things I already mentioned, I value learning very highly. In VC, I have so much to learn. Every time I look at a new company, I can easily spend hours researching the market and learning what I need to know. In poker I can learn new games or improve my ranges in certain spots in familiar games, but the value of that knowledge is 0 outside of me playing poker for money.

Think about how long it took you to get to the point where you are today in your knowledge of the poker industry. Funding a wide range of startups across many different sectors allows the rare opportunity to get exposure to and learn about a lot of different markets/industries and that's a whole lot more exciting than calculating optimal ranges in a game you've been playing for years and years. On top of the actual value in learning for the sake of learning itself, the additional knowledge allows me to add value where I previously couldn't.

Let me know if this makes sense or if you have additional questions.

Just saw this thread and wanted to chime in and say this is really cool. Took some VC class in College taught by a MP of Firstmark Capital and I learned a ton. Eagerly awaiting a recap.