The most important lesson learned in early-stage investing

By boris, September 14, 2015

Sean Silcoff had a thoughtful article in Saturday’s Globe & Mail on my path from entrepreneur to investor. It is a well-written piece with many great quotes and anecdotes and included the most important lesson about early-stage investing that I learned over the past 8 years:

“If the fail rate of our companies is not high enough, it’s not because we are exceptional investors, it’s probably because we’re not taking enough risks. You need to invest in things that nobody has seen, where nobody recognizes the opportunity, and where nobody else would invest – and be right.”

Taking huge risks can be scary for entrepreneurs and investors alike, but risk lays the foundation for what can ultimately be special companies and outsized returns. Every day I remind myself that there is no such thing as a stupid idea, as a market that is too early, or a company that has too many missing pieces. Many of our bets might fail. But when they succeed, it’s pure magic to get to be a part of something special from the beginning.

  • Peter Kemball

    Boris,

    Thanks for drawing my attention to Sean’s outstanding informative article. If there is room for debate on the most important lesson to be learned, my candidates are, “… at such an early stage that there will be 1,000 decisions the team has to take” before hitting it big. “If you don’t have an amazing team, you’re going to take the wrong decisions.” ,and always remind yourself, “… not to judge too much about what may have worked in the past, and keep an open mind.”
    If you are going to attend the NACO Summit this year the panel on due diligence includes a proven approach to getting to know how entrepreneurs think, The Critical Factors Assessment from the Canadian Innovation Centre of the University of Waterloo. Combined with evidence on thinking horsepower, cognitive capability provides a basis for structured approach to deciding whether or not to keep an open mind.

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