So I’m mostly made good investing decisions. My first VC investments were Pipedrive ($1.5B cash exit to Vista), Algolia (IPO candidate), Talkdesk ($10B last round, IPO candidate), Salesloft ($2.3B cash exit to Vista). And I have a few rocketships in the next batch, from Gorgias to RevenueCat to $1B+ Owner and more.
But also, over time, I’ve made more mistakes too. I had 2 relatively big losses that I just shouldn’t have. That were 100% avoidable. They don’t haunt you, but they hang over you.
So if interested — here are the changed I’ve made to investing at SaaStr Fund:
#1. No Third Checks Anymore Unless I am The Lead Investor
A lot of folks want to keep leaning into their winners, and this indeed is how in many cases Sequoia, A16Z, General Catalyst, etc. maximize their returns. But what I’ve learned is that’s them. Rather than put another $3m into a late stage round, better to give that to another start-up in the portfolio where that $3m just might be the difference between success or … not. Having said that, if you are the largest investor, you have to lead from the front. So where I’m the largest investor, I’ll still write third checks.
#2. Don’t Invest Without an S-Tier CTO
If you follow me on social media, this won’t be a surprise, as I say it all the time. But when I look back at the investments where I lost money, the CTO wasn’t S-tier. The world is just too compettive today — especially and even more so in the Age of AI. Even if the CEO can hustle, even if there is product-market fit today, you will just fall behind without an S-Tier CTO in today’s world. It’s too fast today in almost every segment. Even segments that used to be slow. AI has changed the competitive landscape in almost every cases.
#3. If Anything Doesn’t Check Out — Always Pass
Looking back, every single time I had any misgivings about a deal, I lost 50%-100% of my money in the end. This is different than taking risks on where the company will go, what the competitive landscape is, etc.
