Has picking winning startups become harder or easier for investors today?

Jason Lemkin · Jan 13, 2023

You can tell early that a company is operationally successful and will grow, but you cannot predict which ones become billion-dollar-plus outcomes

He didn't expect Pipedrive, Algolia or Salesloft to get that big; only TalkDesk was obvious, from going 1 to 15M ARR with very few employees in a year, and even then he capped it at $1B not $10B

37:05 20VC: WTF is Going On in VC? Are VCs Still Investing? How Has What VCs Want in Investments Changed? Are LPs Investing in New Funds? Why VCs That Invest in Public Markets Are Losers? Dec 2023; Will It Be Better Or Worse with Jason Lemkin

Harry Stebbings · Aug 23, 2023

Believing you can identify 'f-you size' outcomes at seed is a mistake that will make you miss the biggest companies

On his show The Memo, the lead investors in Snap, Twilio and Instacart all shared one commonality: they deeply underestimated the eventual size of the outcome and thought the companies might just be interesting or acquired

39:10 20VC: NEW FORMAT: Mega Funds Will Come Back, Why Markups Have Corrupted VC, Why RIFs Should Always Be An Embarrassment To SaaS Founders and Why Pitching is BS and Fake with Jason Lemkin and Rick Zullo

Jason Lemkin · Nov 3, 2023

As an early-stage investor you cannot identify the winners early enough to act on it — by the time the exponential inflection is visible it is too late to write a check or do anything about it

Ten years of early-stage investing has given him enough time to test this and he has never found he could see it early enough

Scope: applies to early stage investing

43:10 20VC Roundtable: Why Early Stage Founders Should Not be Investing, Why Great Founders Have Low EQ, How the Structure of VC Firms Will Change, Will Founder-Led Funds Compete with Sequoia & Is Investing a Team Sport?

Adam Fisher · Jan 22, 2024

Investors delude themselves into believing they can identify in advance which company will be a big outcome

Roughly 90% of a company's value is often created in the last twelve to eighteen months of its life, so the outcome isn't visible early

0:00 20VC: Why Small Markets are Better Than Big Markets, The Biggest Delusion of Early Stage VC, Why AI Investing is like a Horserace and Why The Most Ambitious Companies Growing the Fastest are not the Best Investments with Adam Fisher, Partner @ Bessemer

Adam Fisher · Jan 22, 2024

Investors cannot reliably identify which companies will become the big outcomes, either early on or at any point; the certainty is retrospective storytelling.

He has gone back to what he actually wrote at the time and found he did not predict the outcome — the concepts and terms didn't even exist yet, so the conviction is a story told after the fact.

Scope: Accepts that returns are in fact concentrated in very few deals — the dispute is about foresight, not distribution

47:52 20VC: Why Small Markets are Better Than Big Markets, The Biggest Delusion of Early Stage VC, Why AI Investing is like a Horserace and Why The Most Ambitious Companies Growing the Fastest are not the Best Investments with Adam Fisher, Partner @ Bessemer

David Frankel · Oct 14, 2024

Seed investors are not smart enough to identify the one-in-a-hundred or one-in-a-thousand outlier in advance; the workable strategy is to be present and hoist a flag saying you're interested in great teams

The winners look like Hollywood outliers after the fact, and Eric Paley, asked by an LP how he knew about Uber, answered honestly that he didn't — the company before was just as interesting and the one after inspired the same hopes

Scope: applies to seed stage

52:29 20VC: Investing Lessons from FC Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

Harry Stebbings · Aug 11, 2025

Venture winners are not obvious early, so investors will often misallocate their reserves and ownership concentration

Companies like Figma were nowhere for years while the product was being built, so the eventual winner isn't identifiable at the time capital is being concentrated

46:51 20VC: Figma, Scale, Wiz: Inside Index's Decacorn Factory | Decision-Making, Investment Process, Biggest Lessons, Biggest Misses | Why Gross Margin is a Fallacy at Seed | Never Turn Down a Deal on Price with Martin Mignot, Partner @ Index Ventures

Harry Stebbings · May 26, 2026

In venture, if you are doing it right, roughly 80% of your portfolio will be positions you were dead wrong about

Scope: if you're lucky

20:16 20VC: Cerebras CEO on the Future of Data Centres, Token Costs and Memory | We are Not in an Infra Bubble & Dario Got a Bad Deal with Elon for Compute | Should US Companies Sell to China & Why Most Layoffs are AI Washed with Andrew Feldman

David Frankel · Aug 8, 2026

No early-stage investor can actually identify the outlier in advance, and anyone who claims they knew is lying

Eric Paley says he underwrote Uber exactly the same way as the company he saw before it and the one after it

75:46 20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough

Jason Lemkin · Nov 3, 2023

At early stage you now need to see roughly 10x more startups than five or six years ago, which is very hard to do as one person

there are so many startups today that missing any single one is meaningless — he no longer feels like an idiot reading TechCrunch the way he did when he missed Slack and Zoom — so coverage requires a huge top of funnel

Scope: unnecessary if your top of the funnel is perfect and you get everyone in; early stage specifically

19:47 20VC Roundtable: Why Early Stage Founders Should Not be Investing, Why Great Founders Have Low EQ, How the Structure of VC Firms Will Change, Will Founder-Led Funds Compete with Sequoia & Is Investing a Team Sport?

Julien Bek · Aug 24, 2026

Picking has never been harder than it is today

There is far greater volume of companies to choose from

11:32 20VC: Inside Sequoia's Investment Committee: Lessons from Don Valentine, Doug Leone and Alfred Lin | How the SpaceX and Citadel Deals Went Down | What Sequoia Specifically Looks for in Founders with Julien Bek

Miles Clements · Mar 9, 2026

Increased competitive pressure to pick right forces investors to extrapolate from early data points, and single anomalous quarters get mistaken for product-market fit snapping into place

He has personally fallen into this trap — a company going from $1M ARR to a $4M quarter right before fundraising looked like PMF but was an anomaly

24:44 Competitive pressure forces extrapolation from too little data

Harry Stebbings · Mar 9, 2026

The binary, winner-take-all nature of today's market makes picking winners in application software feel futile and unimportant compared with simply getting exposure to the biggest assets

You can come into work wondering what you're even doing when the alternative is just doing an Anthropic SPV

25:53 Index exposure to the biggest assets beats picking application software

Harry Stebbings · Nov 3, 2023

One of the best investors of the last 20-25 years holds that nothing about venture has changed: there are two to three great entrepreneurs a year and you just need to invest in one of them — simple but hard

19:32 Venture fundamentals unchanged just find one of the few great entrepreneurs per year

Jack Altman · Nov 3, 2023 · hedged

Venture is so power-law that each fund has to hit one of the small number of companies that matter in a given year, which makes it doubtful an individual can see enough of the landscape alone

only a handful of companies matter per year but there are so many companies that getting one of those shots into a single person's inbox is a coverage problem

20:27 Power law scarcity of companies that matter creates a coverage problem for individuals

Harry Stebbings · Nov 3, 2023

Specialization plus brand dominance solves the coverage problem — pick a narrow stage and sector and build a massive brand there and you won't miss the chance to see the companies that matter

a dominant brand in a narrow slice widens your aperture so the top companies come to you; you still have to pick, but you get to see them

20:57 Specialization plus brand dominance solves the coverage problem

Adam Fisher · Jan 22, 2024

Early-stage investors should accept that the further you peer into the future the less clear it is, and instead back good people with compelling ideas in big enough markets while staying imaginative about how outcomes unfold

Some of his smallest investments, ones he hesitated on because he couldn't see who would buy or how big it could be, turned $2-3M into hundreds of millions

26:09 Accept uncertainty and back good people in big markets while staying imaginative

Alexander Embiricos · Feb 21, 2026

It's a hard time to be an investor because the market is so dynamic

Market dynamism makes it hard to say where value will accrue

48:11 Market dynamism makes value accrual unpredictable