Photo: nytimes blog
We asked angel investors and venture capitalists to tell us about the startups that got away.That is, the startups they could have invested in early, but ultimately passed on for whatever reason.
Even the best investors make mistakes. They overlook opportunities, aren’t aggressive enough, or miss out rounds.
From Ron Conway to Fred Wilson, we have some good stories about who missed what and why.
'I wish I would have borrowed $5,000 and offered it to Dennis in the Foursquare seed round, given that I was helping them tell the story and work their way through the VC process,' O'Donnell tells us.
'I wasn't at a VC fund at the time, but was very tempted to make the offer. The only problem was that I was $30,000 in the hole from working on my startup and literally didn't have a dime.'
Mark Pincus approached an acquaintance, David Tisch, about Zynga when it was Facebook poker, and Tisch walked away.
SV Angel's Ron Conway passed on Salesforce.com because the $30 million valuation seemed too high at the time.
Venrock's Marissa Campise is sure she's passed up some good opportunities, but it's too soon to tell.
Fred Wilson wishes he had invested in Airbnb, but does not wish he had invested in Pandora or Groupon.
'I met Michael of Skillshare in November 2010,' Rob Go of Boston-based Nextview Ventures tells us.
'At the time, he had a vision for creating a learning revolution through in-person classes. He believed (as did I) that everyone has something to teach, and that the barrier to teaching and learning from peers should come way down.
'I loved the idea, and am a big fan of the democratization of education. But although Michael was well regarded, I only really knew him by reputation. He didn't have that much to show -- product ideas were mainly thesis that needed to be tested. He was also raising a very small amount, and I was concerned that the team may not reach enough value-accretive milestones given the modest raise. We were also in the process of doing a close on our fund, so I was distracted. I declined to invest, thinking that we'd have another bite at the apple at a larger institutional seed round.
'Fast forward a few months, and the Skillshare team has executed brilliantly.
'Lessons learned -- follow your hunches, especially about people. It's too easy to think to yourself, This is too early, especially when it's someone you don't know. I should have pinged our friends at Founder Collective who knew Michael well and gotten more direct feedback. Instead, I let pattern recognition take over and saw something a little outside our standard zone and moved on.'
Venrock partner David Pakman missed out on Twitter's C round because he was still getting his sea legs in venture.
'I had just started at Venrock and took a good look at Twitter's C round,' Pakman tells us.
'I don't want to flatter myself and say that we could have won the deal (it went to Benchmark and IVP), but we took a good, hard look at it and we did not move aggressively enough to try to win the deal.
'That was a huge mistake. I was still getting my sea legs in venture (I actually still feel that way more than 2 years later!) and was a bit gun shy in my partnership making my first deal a round priced at $225M-pre, but live and learn...'
GRP Partners' Mark Suster regretted letting Gogii get away, so he competed for it a year later and won.
Mark Suster has a few regrets, but he turned one of them into a victory.
Suster competed for Gogii (TextPlus) only to lose the deal because the company's current investor didn't know him well enough. Also, the team wanted an investor who was knowledgeable about China.
'I decided to put both of those issues to bed in 2010,' Suster writes. 'I came several times to NorCal (where I grew up, actually) and went and met several partners from each Silicon Valley firm. I didn't want this to happen again -- that people didn't know me...I also spent two weeks in China and vowed to make it back frequently.'
Eighteen months later, Suster became a Gogii investor. 'I never gave up. I quietly watched their success from the sidelines and kept spending time with and telling the CEO, Scott Lahman, that I wanted to invest in his next company. The opportunity came up to invest in this one and I pounced.'
Suster also missed out on Magento Commerce and wishes he'd been a part of Twitter. 'I would love to have been in at the $100 million valuation,' he says.
Mike Duda is a partner at Consigliere Brand Capital in New York City. Fun fact: his partner is Phoenix Suns player Steve Nash.
He has invested in three companies: Chloe & Isabel, Birchbox, and STELLAService. He wishes he could add glasses company Warby Parker to his portfolio.
'The one I WISH I had seen but didn't was Warby Parker,' Duda tells us. 'I love what they are doing and, having worked on LensCrafters, I know they have big marketplace potential.'
Ben Lerer of Lerer Ventures missed out on Skillshare, Foursquare, and Uber because he didn't trust his gut.
'There are plenty!' Ben Lerer of Thrillist and Lerer Ventures tells us.
'Uber, Foursquare (I didn't formally pass but didn't pursue them when I should have), Skillshare, and Refinery29 (although I joined the board) are just a few that I've missed.
'In all the situations, I passed because I didn't trust my gut. I thought of reasons why not to do a deal rather than just trusting my intuition.'