Einar Vollset

speaker

326 appearances 2 recordings 1 series first heard Jan 2025 last heard 10 Mar

Einar Vollset’s voice in public audio — every appearance, attributed to the second.

Trend

recordings per month · last 12 months

Recordings per month over the last 12 months — 1 in all, peaking in Mar 2026 with 1.

Appearances

newest first · ▶ plays the moment

Startups For the Rest of Us · Episode 748 | The Ins and Outs of Startup Investing · 14 Jan 2025 podcast

Oh, yeah, for sure. I mean, yeah, I think it's just worth for people to think about. Like, I think sometimes people think, oh, investing in VC funds, you know, think Sequoia, Andreessen, whatever. And it's just like, oh, it's how you get 100x. You know, like you read about these outcomes and you think, you know, what is, you know, they're going to 100x.

The fact of the matter is, like, if you look at the sort of one of the golden sort of decades for venture investing in the US was the sort of decade between 2004 and 2014. It includes, you know, a bunch of like, you know, now well-known names came through that decade.

And so you might think to yourself, like, well, you know, to be in the top quarter of performance of venture funds in terms of return capital in that quartile, you probably returned what? What do you think? Like 5x, 6x, some of that. In fact, the actual math is more like 2x. I think it's 2.16 or something.

So, you know, it was a 2.1x. And over the course of what, 7 to 10 years? Up to 10 years. Unreal. Yeah. Yeah, that's a top quartile fund.

And like, really, the reason is because a lot of funds like and also like, look, I think the median fund still returns like at least one X, but it's there is a good number that that returned less than one X is probably 40% of funds, you don't even get your money back. That's pretty common. And so then you look further as like, okay, well, what's great performance in venture?

Like top clearly like 2X over, in that same timeframe, the S&P 500 probably went way up. I mean, it had the housing crash in 2008, but nonetheless, like what is amazing performance, like world-class look like? And that's actually in that quartile, it was just over 5X. So if you 5X, if you're a venture fund that 5X, then you were in the top 5% of funds in that timeframe.

And I think the reason why people sort of like misunderstand this, they think venture, and then they think like, oh, you know, what do I know, think about when I think about venture? Well, it's like, it's like Airbnb type returns. You know, you hear about like YC, they invested at whatever, probably put same, I was in the same batch. So I know what they put in, probably $40,000, $20,000.

And you know, they, a thousand X or something like that. And so I think that sometimes translates into like, oh, at the fund level, That's the kind of return. So maybe not a thousand, but you're getting a hundred times your money. But that's an extreme outlier for venture funds. And really, if you're looking for a thousand X, you shouldn't be in venture. You shouldn't be in venture funds.

That doesn't make any sense. It's almost impossible to get a thousand. It is impossible to get a thousand X in a venture fund or even a hundred X. If you're wanting to do that, then you should put all your money into single bets. Like you should be investing in individual companies and like concentrate your position as much as you can into your extreme high conviction bets and just go for that.

And that's the way to do that. But a lot of investors, they don't want to do that. And so the question then is like, why would you invest in a venture fund instead of doing that? The reason is you're reducing risk. That's what you care about. Like you're basically trading off. You're saying like, look, OK, I'm willing to forego this notion that I'm going to, you know, 100x my money.

But the flip side is I'm less likely to lose it all. The standard outcome, if you invest all your money into a single company, is you're going to lose it. Like at least an early stage company, you're going to lose all the money. And if that's not something that you want to do, that's not part of your investment strategy, then investing in a fund makes sense. And you're making that trade off then.

I mean, it's probably above way above average return. So good job.

Well, I think I think that's the key thing. Like I tell people this, and I'm not just I'm not being, you know, unusually humble about this. And the fact is, like, TinySeed wouldn't work if you weren't there. Yeah. At least the early days. I don't have the deal flow. I just don't.

And I think because of your background with MicroConf and Startups for the Rest of Us and all the stuff that people know about you, and there's probably you, and I've been saying there's less than half a dozen people worldwide that naturally has that kind of deal flow, quality deal flow, pricing power that's coming your way.

And I think really that's part of the reason why you would invest in a fund. Because if you look at it, say you have an amount to invest in, whatever that is, 100,000, 250,000, 500,000, whatever it is. Okay, well, if you do your research and look, you realize you probably shouldn't just pile into just, you know, a single bet, like put it all on black as it were.

So instead, what you want to do is you want to go out and you want to make a lot of bets, ideally. Like you probably, I think like the math pretty much says, like, you know, if you're going to have a better than 50% chance of at least breaking even, you should be making at least, I think it's somewhere like 15 and 20 bets, like investments rather than bets. I shouldn't call it bets. Yeah.

20 investments. But if you think about, okay, how do you do that? If you have $100,000, you say, okay, I believe the math. I want to put $100,000 in. Now you have to write 20 checks of $5,000 each. Now you have more problems than when you started because do you have the deal flow to find 20 quality investments?

Are you going to see enough good deals just from your networks and friends and connections and whatever, an angel list or whatever, in order to make that, those investments? And I would argue that most of the time you don't. Like you don't see the, you don't get to access the deal flow. You don't have it. But even if you did, so say you were uniquely well-connected, now it's like, okay,

Now you need to convince people to take a small check from you individually. Like so now like most people aren't going to take like most people who invest like an individual investor that goes along and says, all right, well, you know, I want to put $5,000 in.

It actually can be quite hard to even if people are raising money, it can be quite hard to get people to accept $5,000 because it's such a small check. So there's usually like a minimum before you have to get in.

Showing 241–260 of 326 · page 13 of 17