No Failed Start-Ups
What kind of fund manager would say that or even worse propose that as a goal for their team? Um... me. I was inspired by Jim Collins' famous concept of Big Hairy Audacious Goals (BHAGs) and by an example used in a book called Switch where an oil and gas company set a goal of "no dry wells" when the norm at the time was the majority of drills yielded no oil. No failed startups is audacious because according to CB Insights, the average failure rate for new companies is 70%. And this goal might not be possible over the long term, but to date we are happy to boast no write-offs in our portfolio after more than three years in operation. I'm pretty sure our team would still be extremely proud if we shot for no failed start-ups and ended up with a 20% failure rate over a 10 year period (3x better than the industry average). But what we decided was most important is what this would do to change our behaviour. Almost all VCs operate in a world of home runs and strikeouts. Every investment is to be pushed to the brink in the hopes that one out of 10 will become a unicorn and return more than the entire fund, while 65% of companies return less than their initial investments. The common "wisdom" that goes along with this is to cut your losses and ignore all the underperforming companies as they waste your time and focus only on supporting your winners. Our team decided that, "for as long as one of our founders is willing to keep fighting, we will be in their corner fighting alongside them". Oh, and our other BHAG? We want to be in a position to provide funding to every founder that is capable of achieving business success through climate change solutions. Again, this goal will also be hard or impossible to attain for many years, but this mindset ensures that we look very carefully at underrepresented and underfunded but capable groups and aim to scale up our fund to work with more founders and create more impact.