256. A Proprietary Tool to Source Startups, The Commoditization of Capital, and the New Exit Environment (Villi Iltchev)

This post is by Nick Moran from The Full Ratchet: VC | Venture Capital | Angel Investors | Startup Investing | Fundraising | Crowdfunding | Pitch | Private Equity | Business Loans

Villi Iltchev of Two Sigma Ventures joins Nick to discuss Using “George” a Proprietary Tool to Source Startups, The Commoditization of Capital, and the New Exit Environment. In this episode, we cover:

  • Walk us through your background and path to VC
  • What’s the thesis at Two Sigma?
  • Tell us about George.
  • What’s George’s biggest blind spot?
  • What is your decision framework on investments?
  • What characteristics do you look for in markets when identifying new sectors/spaces of interest?
  • How long after investing in/working with a company do you tend to know whether it’s going to work or not?
  • Do you attempt to handicap execution risk vs. technical risk vs. commercial risk?
  • Capital is a commodity and, largely speaking, there doesn’t appear to be a lot of differentiation in venture.  How do you combat the commoditization of venture?
  • Aside from bankers… who do you think stands to lose the most from the increase in SPACs and direct listings?
  • Any other downsides, unintended consequences, or problematic issues that could arise from the increase in SPACs?
  • A decade from now, will the U.S. be the best country to start a tech company?  If it shifts, what are the prime candidate countries to replace the U.S.?
  • International investment strategy for Two Sigma?
  • Three data points…  hypothetical investment scenario
    • Let’s say you’re approached to invest in an enterprise SaaS startup.
    • Founder has a great background.
    • MRR is $200k, growing 20% MoM.   LTV:CAC is 5:1.  Quick Ratio greater than 4.
    • Catch is, you can only ask 3 questions (Read more…)