How much does venture decision-making depend on pattern matching against known comparables?

Kulveer Taggar · May 31, 2019

VC decision-making is heavily driven by pattern matching, so businesses without close comparables face harder fundraises

VCs see thousands of deals a year; when a company like Zeus appears there are few similar businesses, so its growth profile and capital requirements feel outside their wheelhouse

9:49 20VC: Why You Must Have A Customer Acquisition Strategy From Day 1, How To Test and Validate Ideas At Speed & Why You Should Speak To Investors Before Starting Work On Your Idea with Kulveer Taggar, Founder @ CEO @ Zeus Living

Jason Lemkin · Aug 23, 2023

Adverse selection arguments in venture are taken too far and lead investors to miss undiscovered gems

The logic of positive selection funnels you to the obvious pedigree deal — eight ex-Stripe people with a Stripe 2.0 — which works for big funds but he would never have found Algolia, Front, Pipedrive or Gorgias had he been prejudiced against European founders

Scope: positive selection does work for big funds hunting decacorns

43:58 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

Alex Taussig · Feb 12, 2024

Vinted's model of free selling plus demand-side fees was deeply counterintuitive to US investors because all four or five dominant US resell marketplaces monetise the supply side

US investors' pattern recognition came entirely from supply-side-monetised resell marketplaces like Poshmark, so a listings-origin company layering on buyer fees did not fit the template

11:01 20VC: The Ultimate Guide to Scaling Marketplaces, Why Rule of 40 and EBITDA Optimisation is BS, How Founders & VCs Should Approach Market Sizing and Outcome Scenario Planning and Why Europe is Failing with Vinted CEO, Thomas Plantenga & Alex Taussig

Johannes Reck · Jun 23, 2025

In 2010-2011 Europe had essentially no venture ecosystem, and the biggest obstacle to funding was not being a copy of an existing US company

Investors like Rocket Internet's Oliver Samwer asked what US original the company was copying, and having no equivalent meant no interest

Scope: describes 2010-2011 Europe, not today

23:59 20VC: The Wild Story Raising $450M From Masa and Softbank | Why My Biggest Mistakes Came From Listening to VCs | Why 100 VCs Turned Us Down | Why European Founders Are Tougher Than US Founders with Johannes Reck, GetYourGuide

Johannes Reck · Jun 23, 2025

They were rejected everywhere when raising capital because they were not a copycat of a US company, were first-time founders, and were in travel, a sector most Silicon Valley investors dislike

Each of those attributes was disqualifying for the investors he met; US investors also conditioned funding on relocating to the US

Scope: about the early 2010s fundraising climate

26:55 20VC: The Wild Story Raising $450M From Masa and Softbank | Why My Biggest Mistakes Came From Listening to VCs | Why 100 VCs Turned Us Down | Why European Founders Are Tougher Than US Founders with Johannes Reck, GetYourGuide

Miles Dieffenbach · Aug 4, 2025

The best venture ideas look inherently unattractive because they cut against the grain of how human minds work today, so they won't be hot at the time of investment

Mike Maples' framing of companies going against the grain of the universe; they are dysfunctional relative to current intuitions

25:14 20VC: Inside Carnegie Mellon's $4BN Endowment | Why 90% of LPs Shouldn't Invest in VC | The $140BN Problem with Multi-Stage Funds | The Hidden Math Behind DPI, TVPI, and Illiquidity with Miles Dieffenbach

Martín Escobari · Nov 11, 2022

Passing on Nubank was his biggest miss because he applied a historical pattern dogmatically and underestimated a founder's ability to change the conditions the pattern assumed

No emerging market credit institution had ever survived more than ten years without deposits, and Nubank had none — but David Vélez found a way to build deposits by disrupting the money market, including regulatory changes that were hard to anticipate

Scope: about his own Series A–C passes

41:14 20VC: Why Market Size is Everything | Three Signs of a Bull Market and How To Remain Disciplined | Why Investing is a Young Person's Game | The Secret to Negotiation | Missing a $200M Opportunity in Nubank and more with Martín Escobari, Co-President @ Ge

Cristóbal Valenzuela · Aug 28, 2023

The good investors are the ones who are not looking for patterns

Many investors told him generative AI wasn't a thing and to stop calling it one, i.e. they judged by existing patterns rather than the opportunity

0:00 20VC: Why AI Models are not a Moat, Where Does the Value in AI Accrue; Startups or Incumbents, What the World Has Got Wrong About AI, Why AI Needs a New Story and Who is the Right People to Tell it with Cris Valenzuela, Co-Founder & CEO @ Runway

Harry Stebbings · Jun 17, 2024

The best founders are usually anomalies who don't fit investor patterns

Cites Daniel Ek asking Series A investors for a CEO replacement because he didn't want the job

15:16 20VC: Index's Danny Rimer on Investing Lessons from Hits like Figma, Discord and Etsy to Missing Snapchat, Airbnb, Facebook & Spotify | Why Valuation is a Trap and Market Sizing, Signalling and Sector/Geo-Specific Funds are all Noise

Nabeel Hyatt · Apr 4, 2025 · hedged

Pattern matching — the 'Brita filter' model of investing — is not the right way to evaluate companies in this market

He is not executing the way he wants to do his job, and doesn't think trying to win the coverage game is how his partnership should work

Scope: framed as 'I don't know that' rather than a flat denial; framed partly as his own preference for how to do the job

12:56 20VC: Why To Win in AI, Investors Need to Change Their Approach | Why VC is Run by Principals and Associates and is a Broken System | The Bull Case for Anthropic & Whether Deepseek Changes Their Strategy with Nabeel Hyatt @ Spark Capital

Harry Stebbings · Feb 23, 2026

Backing Canva required investors to be mentally plastic and depart from traditional investing rules

A non-technical married couple in Australia doing yearbooks fit no conventional pattern

45:31 20VC: Inside Coatue's $70BN Machine: Why Price Matters Least | Why Mega Markets are the Most Important | How to Assess Durability of Revenue and Margins in AI with Lucas Swisher

Logan Bartlett · Aug 29, 2022

His biggest recurring growth-stage mistake is getting hung up on the market's machinations at that moment rather than looking far downfield and asking whether the outcome will happen and whether this is the company to do it

At Battery he passed on Snowflake because customer calls were raw and Amazon's Redshift looked like a formidable incumbent on its home turf, when the long-run need for lower compute cost and higher performance made a Redshift alternative inevitable

32:23 20VC: Is Now Really the Best Time to Be Investing? WTF is Happening at Growth Stage Investing? Why VCs Have Gotten Lazy Over the Last 2 Years? Investing Lessons from Hitting with Braze and Missing with Snowflake with Logan Bartlett, Managing Director @ Re

Byron Deeter · Aug 25, 2025

Formal scenario analyses systematically understate upside, and the real driver of a deal getting done is a partner's conviction that the extreme upside case is possible

Memos are written to be rational and bracket a medium-term horizon partners will accept, so nearly every one solves to about 3x; the tiebreaker is always the gut belief in a 100x scenario, a qualitative overlay with massive quantitative implications

Scope: Bessemer still requires the scenario analysis in every investment recommendation

49:51 20VC: Do Margins Matter in AI? | Is Defensibility Gone For Good? | Is Vertical SaaS Dead in a World of AI | What SaaS Rules Are BS and No Longer Apply in a World of AI | The Future of Venture: Why Chanel vs Walmart is BS with Byron Deeter

Harry Stebbings · Nov 10, 2025

Reasoning from market comparables is dangerous when investing.

Investors dismissed Carvana because the largest car showroom was only a $300M market cap.

54:03 20VC: Benchmark's Newest General Partner Ev Randle on Why Margins Matter Less in AI | Why Mega Funds Will Not Produce Good Returns | OpenAI vs Anthropic: What Happens and Who Wins Coding | Investing Lessons from Peter Thiel and Mamoon Hamid

Alex Rampell · Jan 12, 2026

Investors should not let prior-generation comparables anchor their valuation discipline, and should be willing to admit a pass was wrong and re-enter at a much higher price

He haggled over a $5M difference on Plaid's Series B because Yodlee had a terminal value of $600M, then paid $2.4B in the Series C — the anchor made a trivial difference feel material

Scope: framed as his biggest miss

70:51 20VC: a16z's $15BN Fundraise with Alex Rampell | The Best Companies Have Hostages Not Customers | The Best Founders Materialise Capital, Customers and Labour | Mid-Sized Funds with Die and The Future of Venture Capital

Harry Stebbings · Oct 12, 2020

Older investors struggle because they project past successes and failures onto future opportunities

Pattern-matching from prior outcomes distorts assessment of new growth opportunities

26:35 20VC: CRV's George Zachary on His Relationship To Money and How it has Changed Over Time, Why The Best Founders Have Often Experienced Parental or Home Instability and The Stories Behind Investing in Unicorns; PillPack, Yammer and Udacity

Kevin Ryan · Apr 10, 2024 · hedged

Investors, including himself, cannot really stop past losses in a sector from biasing future decisions — many VCs pass on a deck unread because they lost money in that sector years ago

He sees three of ten VCs reject his companies on sector history alone, and admits bad experiences colour his own thinking despite trying intellectually to prevent it

Scope: he tries to prevent it and sometimes succeeds

16:06 20VC: Are the Best CEOs the Best Fundraisers, Are the Best Founders Insiders or Outsiders to a Problem, Why Ownership Should Not Be a Focus in VC & The Biggest Lessons Scaling MongoDB to $26BN Market Cap with Kevin Ryan, Founder @ AlleyCorp

Martin Mignot · Aug 11, 2025

Every investment creates bias for future decisions, not just bad ones — great investments bias you too by making everything else look inferior

Being early in Revolut made him evaluate later fintechs by whether Revolut could or would do it better

19:37 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

Mike Cessario · Jan 20, 2023

Traditional CPG investors misjudged Liquid Death because they don't understand the digital and social world well enough to value social traction, whereas tech-side investors did.

Liquid Death had more social followers than Aquafina within four months without a real product, and people were sharing images of a beverage — signals the tech investors could read and CPG investors could not.

Scope: about the early days of the company

7:37 20VC: Turning Canned Water into a $700M Media and Health Company, What Makes Truly Great Brands, How Founders Can Build Their Brand From Day 1 Today & How to Create Viral Content with Little to No Budget with Mike Cessario, Founder and CEO @ Liquid Death

Markus Villig · Nov 13, 2024

An Estonian real estate firm with no tech experience made a smarter investment decision than sophisticated VCs because it judged Bolt purely on business merits rather than on the competitive narrative

They had never heard of Bolt's competitors, so they evaluated the metrics and the business itself; the VCs who knew the category anchored on the incumbent narrative and passed

43:29 20VC: Bolt; The Most Insane Story in Startups | Turning a $5K Loan into an $8BN Company | Why Every VC Turned Down One of Europe's Biggest Winners | Competing with Uber & The Future of Micromobility and Self-Driving

Markus Villig · Nov 13, 2024

The New York crossover investors who underwrote Bolt on numbers were right and the VCs who underwrote on industry narrative were completely wrong

The New York funds did deep analysis of numbers, market shares and trends and made a killing; VCs ignored strong numbers in favour of the prevailing narrative about the category

52:47 20VC: Bolt; The Most Insane Story in Startups | Turning a $5K Loan into an $8BN Company | Why Every VC Turned Down One of Europe's Biggest Winners | Competing with Uber & The Future of Micromobility and Self-Driving

Harry Stebbings · Jan 6, 2025 · hedged

Passing on Airbnb was excusable because at the time it was a crazy idea from a founder without a blue-chip background and not a straight-down-the-fairway deal

It required seeing something genuinely non-obvious at the time

Scope: framed as his own reasoning while questioning Mike

35:20 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

Winston Weinberg · Jan 19, 2026

In chaotic or poorly understood markets people default to external social signals like resumes and logos rather than their own gut, and this is happening a lot in AI investing

When people don't understand what's going on, social signals feel like the safe bet

Scope: hopes it stops as markets mature

50:30 20VC: How Model Performance is Plateauing | Two Key Rules for Effective Deal-Making | Company Building Lessons from Keith Rabois, Brian Halligan and Pat Grady | Why Enterprise AI Adoption is Years Off with Harvey CEO Winston Weinberg

George Zachary · Oct 12, 2020

New categories of company require new types of investors to conceive of them, which is why younger venture investors are more willing to back novel models

Most VCs passed on Yahoo because it was 'just a list' and passed on eBay because they couldn't see why a flea-market website would produce margin — the concept of network effects didn't exist in the mid-nineties

24:55 Younger investors more willing to back novel business models unconstrained by past pattern matching

Adam Fisher · Jan 22, 2024

Pattern recognition is on the whole a good thing, and its most valuable output is recognising what won't work rather than what will

Knowing what won't work helps you avoid wasting time on bad deals, bad entrepreneurs and bad strategies; it takes years to develop and is what he is actually paid for and why entrepreneurs are attracted to him

32:10 Pattern recognitions main value is identifying what wont work

Shardul Shah · Sep 16, 2024

Pattern recognition, benchmarking and risk mitigation in venture are exercises in psychological safety rather than genuine analysis

There is so much long tail risk in any company that these frameworks don't actually improve selection

30:48 Pattern matching and benchmarks serve psychological safety not genuine analytical improvement