Timmy Wahba

Hot take. Refrain from seeking out fellow VC firms as a resource to adapt to changes in the venture capital ecosystem. Funds have their investment philosophy, with a strategy their LPs expect them to carry out. That investment strategy is cemented in seeking investment opportunities of yesterday. When you see "co-investment" as a strategy to leverage, it is code for "follow-on investment" - an approach to mitigate risk in numbers. We have seen countless times how "follow-on" investing too often places trust in the investor lead, with groupthink overpowering due diligence. Groupthink is antithetical to adapting to a new VC landscape. Embrace industry, not VC. Engage regional innovation hubs outside of SV/NYC/BOS. Don't follow. Lead.

To strategically analyze market risk in an emerging technology, I consider Amara's Law, which states: "We overestimate the impact of technology in the short-term and underestimate its effect in the long run." When I evaluate investments in emerging tech, I adopt Amara's mindset and ask myself: 1. What will happen to the team and technology after the sector becomes overcrowded with capital and new entrants? 2. Will the team and technology retain motivation and differentiation after ten years? 3. Is the value proposition a platform for a generation or a plug-in to an ecosystem not very well understood? The boom and likely collapse of investment in generative AI will soon serve as a VC case study and refresher course on Amara's Law.

Balancing your work and life as a Venture Capitalist is less difficult than other roles in the venture ecosystem. Take, for example, the entrepreneur that a VC invests in. That founder makes decisions with immediate impact on their team, company morale and direction. By the end of the day, week, or month the founder will know the result of that decision, and whether sacrificing business over family was worth it. That level of pressure can disrupt and overwhelm work/life balance. Venture Capital work/life balance does not have such pressures due to the lifetime/success of the fund. VCs find out if a decision was wrong or right, not in months, but years later, and privately. All jobs have stressors, but balance of VC work/life isn't one.

When analyzing competitors with a similar value proposition, it is common for entrepreneurs to be discouraged. Don't be! it is too early to abandon an idea because there is already embedded competitor. Instead, changed your mindset in the following ways: 1.) Look at competitors as validation of product market fit. 2.) Learn. Competitors spent significant time & money finding their customers. Fortunately for you, you can take advantage of their hard work & have a clear blueprint of their marketing strategy with various tools ie: similarweb.com or semrush.com. These platforms provide insights of a competitor's marketing tech stack driving their sales funnel, ad placement/budget, who, how & where they target obtainable market segments.

Actually, I respectfully disagree with Arjun Pillai on some additional signals he looks for (press releases of new startups, the cohorts of top-notch accelerators and funding rounds from tier 1 investors.) Press releases are paid for. It is self-submitted and largely unverifiable. Small indicators of supporting evidence are small, such as financial resources to put out press release or the desire to attach a trending technological buzzword to a startups brand. Press releases may provide small indicators of the attractiveness of emerging tech, but in private markets where startups operate, press-releases touting a product pivots or milestone provide little measurable value to verify an emerging trend or opportunity.

Although methodical approach to evaluating the target company's existing customer acquisition costs and strategy is critical, it may be misleading. Many venture-backed companies pursued customer acquisition at all costs to meet the expectations of their investors and board members. This pressure is notable and observed in recent acquisition cases where customer acquisition was skewed or, at worst, manipulated customer acquisition data to justify the company's valuation or acquisition price. The answer is to: 1. Go deeper. Get a historical understanding of customer acquisition cost in all prior financials at each fundraising round. Is it consistent? 2. Get personal: Interview the employees and architects behind the data & strategy.