Today: Apr 17, 2024

Lesson for Silicon Valley: Successful startup investors have this trait!

3 months ago

TLDR:

– Early-stage startup investors who have a successful track record share some common traits, including not co-investing with others and avoiding solo founders.
– These investors, called “SuperForecasters,” make a profit on two-thirds of their investments, and 20% of their investments return over 10X.
– Silicon Valley investors tend to have a herd mentality, but the best early-stage investors have proven to have better success by coming to their own conclusions.

Angel investing in early-stage companies can be a difficult task, with investments often being a numbers game. However, a select group of successful investors, known as “SuperForecasters,” have managed to consistently pick winners. These SuperForecasters have a high rate of profit on their investments, with two-thirds of their bets returning profit and 20% of their investments returning over 10X.

One of the most interesting characteristics of SuperForecasters is that they rarely, if ever, co-invest in the same startups. This is in contrast to the herd mentality often found in Silicon Valley, where investors tend to follow the lead of high-profile investors. SuperForecasters prefer to come to their own conclusions and theories, which has proven to be more successful for them.

The article also highlights the success of TRAC, a San Francisco-based early-stage venture firm, in predicting startups that have the potential to become unicorns, with valuations above $1 billion. TRAC’s model, informed by the insights of SuperForecasters, has identified 30 startups that are likely to take off.

Overall, the key takeaway from the article is that successful early-stage investors have unique characteristics and approaches that set them apart from the crowd. Their ability to identify promising startups and make profitable investments is a valuable lesson for Silicon Valley and the wider investment community.