Are the best venture deals always competitive to win?

Sumeet Gajri · published Jan 17, 2020

Investors should treat every founder interaction as one of many over a lifetime rather than a one-shot event, because founders start multiple companies and a good impression can win you the next round even when you can't partner this time.

He decides using a seventy-year lookback test; concretely, a positive interaction with the Cerebras founders three years earlier got him into their competitive new company round despite not investing the first time.

8:13 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta

Sumeet Gajri · published Jan 17, 2020

The better use of an investor's time is identifying the 10 to 20 companies of a generation that will matter and spending years earning a place on their cap table, rather than meeting a large volume of companies at their fundraising moments.

Deep long-run relationship building lets you partner outside competitive processes — he met Instabase's founder over 100 times across four years before investing between the Series A and Series B.

12:53 20VC: Portfolio Construction, Optimising SPVs, Opportunity Investing "Between Rounds", Being Distribution-Centric Over Product-Centric and Capital Concentration Within Funds With Sumeet Gajri, Chief Strategy Officer @ Carta

Semil Shah · published Nov 21, 2022

Firms without hot brands can end up with outsized ownership in category winners precisely because nobody else was competing for the deal — Crosslink ended up owning over 20% of Chime through a modest deal

No one was looking at the deal, so the price and ownership were available

42:47 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager

Ophelia Brown · published Mar 17, 2023

FOMO investing makes no sense, and heavily competitive deals with many term sheets are ones to avoid

If early-stage investing is about seeing something others don't, then 15 term sheets on a deal means everyone is seeing the same thing

Scope: about early-stage deals

24:52 20VC: Why Growth Investors Ruined the Venture Market, Why Marketing in Venture Has No Substance, Why Follow-On Investing Can Damage Returns and The Mistakes VCs Made in the Last 18 Months with Ophelia Brown, Founder @ Blossom Capital

Ophelia Brown · published Mar 17, 2023 · hedged

It is still possible to win good early-stage deals with no competing term sheet

Blossom's last five investments had no single competing term sheet

Scope: "we could be doing something horribly wrong"

25:41 20VC: Why Growth Investors Ruined the Venture Market, Why Marketing in Venture Has No Substance, Why Follow-On Investing Can Damage Returns and The Mistakes VCs Made in the Last 18 Months with Ophelia Brown, Founder @ Blossom Capital

Jake Saper · published Mar 10, 2025

The best deals are mostly competitive but not always — a unique insight others don't believe, or getting to the founder first, can still produce a non-competitive deal

Veeva was not competitive, showing uncontested access is still achievable

26:17 20VC: Lessons from Investing $2BN and Returning $8BN in Cash | Why Most Venture Partnerships are Broken | We Sold Salesforce Early and Lost Out on Billions | Are The Best Deals Always Expensive and Competitive with Jake Saper @ Emergence Capital

Paul Graham · published Mar 2009

How hot a startup's fundraising is correlates surprisingly little with how well the company eventually does, so angels need not work hard for startups to access good deals.

Many hot startups fail and many unloved ones succeed — and the unloved ones are desperate enough to take money from anyone at a low valuation.

source How to Be an Angel Investor

Paul Graham · published Aug 2010

Of the two causes of hot deals—company quality and domino effects among investors—company quality is the better predictor of success.

source The Future of Startup Funding

Paul Graham · published Aug 2013

Causing an investor stampede is not highly correlated with being a successful startup.

Lots of startups that cause stampedes flame out, and many very successful startups were only moderately popular in their first round.

source Investor Herd Dynamics

Harry Stebbings · published Nov 27, 2024 · hedged

The commonality across Klaus's winners is that they were not investments made in formal rounds but serendipitous, in-between 'tweener' deals engineered when no round existed

Every example Klaus gave — Neko, Spotify, Airbnb, Revolut, Facebook — came through a personal connection outside a fundraising process

53:11 Best investments happen through personal connections outside formal rounds

Klaus Hommels · published Nov 27, 2024

In earlier eras the venture market was far less professionalized, leaving room for 'cowboys' to preempt and get into deals outside formal rounds

His own examples came from a time when the market was not in the professional state it is now, plus a personality that wants a deal immediately and therefore tries to preempt

53:27 Market professionalization has narrowed room for preemptive cowboy deals

David Schneider · published Sep 11, 2024

Nearly every great company is competitive to invest in, though rarely a founder will specifically request you and turn it into a negotiation over terms rather than a competition

There are a lot of dollars chasing deals

42:50 Nearly every great company is competitive uncontested deals are a rare exception