An equestrian analogy about VC investing
Investing like a VC by thinking about horses
A metaphor for VC investments. I'm not sure what hats have to do with it though.
Much like all sentences that begin with, "There is an old Chinese proverb...", this one is just as colourful yet enlightening.
The VC mindset
A VC I met recently explains the 3 facets of VC investing as below:
- The right racetrack: It is clearly important to be on the right race track (industry). If you happen not to be in the right racetrack, a fast horse will only get you further away from the right direction.
- The right horse: What is the horse (company) doing in said racetrack?
- The right jockey: A good jockey (people) is much more important than either the horse or the race track.
Of course, the caveat is that once you see enough of these (I'm not sure how much is enough. Perhaps in a later post), you develop a 'gut' instinct.
This 'gut' in the words of this VC is much more important than due diligence.
The gut
Well, apparently this gut instinct is akin to investing in the stock market, in the sense that an experienced investor would not really blame Saturn for a turn in the market. Such an investor would just add to his/her intuition and know how to move on.
A word on hats
For anyone who has ever been to Royal Ascot, it really is more about the drinking and the hats than the racing. I suppose VC investments are not much different. Rather than focusing on the racetrack (industry), horses (company) and jockeys (team), people tend to focus more on the hats/clothes (vanity metrics of a startup), instagram (peer pressure to invest in similar ways) and the general debauchery (no change here) of the overall investment experience.
At this point it should be clear that I know nothing about horse racing. But you can't blame a man for trying.
