Lecture Notes: Venture Capital and the Venture Mindset

Introduction

Speaker: Ilya Strebalov, Professor of Venture Capital at Stanford Graduate School of Business
Key Idea: Venture capital is not a gamble; it operates on a "Venture Mindset."

Top Companies: Many top companies like Apple, Microsoft, Nvidia are venture-backed.
Venture Capital Role: Invests in small, young, high-growth companies (e.g., Uber, Airbnb).
Process: Finding, investing, nurturing young companies to success.

Examples:
- Sequoia: Established for over 30 years
- Venrock: Active since the 1960s
- Emergence Capital: Specializes in B2B SaaS
- Andreessen Horowitz (A16Z): Leading in AI investments
Success Measure: Investment persistence and outsized returns.

Principle #1: Home Runs Matter, Strikeouts Don't
- Focus on successes that cover numerous failures.
- Example: Juicero was a VC-backed failure, yet the firm remained successful.
Principle #2: Get Outside the Four Walls
- VCs engage with founders outside formal settings.
- Example: Sequoia's "early bird" system led them to invest in WhatsApp.
Principle #3: The Prepared Mind
- Preparation enhances the ability to capitalize on opportunities.
- Example: A student quickly responding to VC inquiries led to investment.
Principle #4: Say No 100 Times
- VCs reject many opportunities, focusing on a few promising ones.
- Use a "fast lane" to quickly dismiss unsuitable deals.

Cold Emails: Constructing a compelling blurb can yield high positive responses.
Tips for Successful Blurbs:
- Highlight the founder's role and competitive advantage.
- Be concise: 2 paragraphs max, focusing on founder and solution.
- Practice and refine the blurb before sending it to VCs.

Constructive Failure: Failures can provide learning opportunities.
Attitude: Embrace and learn from failures, keep trying new ventures.
Personal Advice: Reflect on past failures and extract lessons to become a "failure champion."