I really enjoy meeting with our investors. Last week, Eric and I went to visit one of them.
A third-party database says that they have the best returns among all private equity investors. Top dog. The Big Kahuna. While VC returns have lagged for most, these folks are absolutely crushing it.
On the VC side, they started a trend that was very unusual. 10 years ago they started backing experienced VCs who had started their own firms and were investing out of smaller funds. They were dropping “known” brands and big funds, for the most part. It was a very contrarian move, as most LPs were picking great brands, whose funds were getting progressively larger.
So, Eric and I updated them on what we’re doing. They asked insanely great questions and had some very insightful comments. In summary, they continue to like our strategy and approach of “low volume and high commitment” investing (see “A VC’s Strategy and Kill Rate”).
They don’t like the high-volume seed model, when a VC firm invests in dozens of seed companies a year and then walks away from 90% of them (see “Seed Companies Are Not Lottery Tickets”). They think it is bad for entrepreneurs and bad for investment returns.
But, what I enjoyed most was the great chemistry we continue to have with this group. Lots of joking, some ribbing, and as always, very thoughtful discussions. I always learn a lot from them.
It means a great deal to me personally to have investors whom we like, respect and cherish. We love our entrepreneurs, and we love our investors. We are determined to give our best for them each day.
We work for them.