So when I started writing venture checks in 2013, I didn’t know what I was doing, but I had a strong start:

So it was a good start.  Since then, I’ve made some pretty good other investments as well.  But also, I made some that … weren’t.

For a while, the 2021 Go Go Days masked everything.  Almost everything looked great and had an up-round.  But 2024 unmasked a lot of things.

And now, I’m going to lose money on deals.  It’s OK at some level.  It’s part of the model.  But now I can see clearly why in some deals, I’m going to lose all my money.

The top reasons an investment has turned out to be a Zero:

#1.  Any misrepresentation about the financials, no matter how small

If the financials are misrepresented even a smidge, I’ve lost all my money or almost all.   If revenue was overstated a bit.  If contracts were claimed to be closed that weren’t quite closed.  Does it really matter?  I think it turns out that it does.  It just gets worse.  I’m going to lose all my money here.

#2.   If founders hid anything in the round and/or in diligence.  Almost no matter how trivial

Related to but not quite the same as #1.  If the founders hide churn, or hide a co-founder is leaving, or really anything that much matters — again, it’s just a smoking gun.  It gets worse.  They’ll hide even more.

#3.  If the founders refuse to get the burn rate under control

OK these ones aren’t always zeros.  But they’ve been close to it in my experience.  I haven’t done better than 3x here.  Note this isn’t just a unicorn issue.  It can happen after raising just a few million, too.

#4.  If I relied on anyone else being in the round or having already invested, unless they said it was clearly the best deal they are in right now

I haven’t done an investment just because a great investor was already in the deal, but I’ve almost done it.  I’ve skipped some steps because of it.  Here, I will lose all my money.  You have to ignore who else is in the deal.

#5.  Not Actually SaaS.  Pseudo SaaS but Not Actually SaaS.

I won’t do any of these anymore.  The SaaS playbook just doesn’t really work in pseudo-SaaS.  Or rather, it seems to work at first, but then it doesn’t really scale.


Now this sounds dramatic, and it is a bit dramatic, but the winners will more than balance out the losses.   In aggregate, these total or almost total losses won’t add up to a huge amount when measure against the gains and winners.  A real amount, but not a huge amount.

But — these losses were 100% avoidable.  That’s what sticks with you.

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