A retrospective on my investments
A retrospective on my investments
What went well, what went...not so well
My favorite sprint meeting is the retrospective. Partially because it’s fun to watch your coworkers answer questions like “Describe the past sprint as a summer cocktail”, but also because it forces us to look back, determine what went well and not so well, and make improvements accordingly.
A year ago, I put together an industry map of 10 digital health companies I wanted to invest in. (Note: this was just an exercise for my AV application, I have not invested in any of these companies). If you want to read more about my first year in VC, I wrote about it here.
In the spirit of continuous improvement, I thought it might be fun to look back one year later and see how I did. Since the tail of VC is long-winded (the majority of these companies have not gone through an exit), I put together a quick framework for determining a “successful” investment. (Note: my framework is overly simplified and lacks critical information that an actual investor would have access to).
Criteria
Successful exit (this was weighted the most heavily)
Increased valuation
Raised more funding
Displayed positive traction (growth, partnerships, etc)
I will be the first to admit that my scoring rubric is inherently flawed. It favors later-stage companies with larger valuations (which does not necessarily translate to the best exits). It also doesn’t consider the terms of the investment, which is critical for determining success.
Winners and…participation trophies
The biggest surprise to me was the runaway winner Akili, due to its recent exit via SPAC1 (are people still doing SPACs?). The best scoring companies are all later-stage with high amounts of funding and positive traction.
The bottom three companies leaned much earlier-stage, and scored lower on traction and funding. They also had less information publicly available, which may have skewed their position.
What I learned…and would I invest again?
When I did this a year ago, I knew very little about how to pick a good investment. I simply picked companies that were solving interesting problems in healthcare. I stand behind my choices, but I also now understand that most of them will not be winners.
Picking winners is really really hard. You just never know. And that is why VC is set up the way it is. You pick a lot of flops so you don’t miss a moonshot.
And who knows, maybe one of these companies will do the most extraordinary thing of all, and go on to transform healthcare.
https://www.biopharmadive.com/news/akili-public-spac-merger-digital-therapeutic/630196/