What characterizes a venture fund's best-returning investments?

Klaus Hommels · Nov 27, 2024

All of the biggest winners are non-obvious at the point of investment

Spotify had music without the rights, Skype had no business model because SkypeOut didn't exist yet, Airbnb was extremely early

49:54 20VC: Why Price Sensitivity is BS | Why "Portfolios" are Merely a Construct to Make LPs Happy | Why the Best Investment Never Happen in "Fundraising Rounds" | What Europe Needs to do to Become a Superpower Again | Klaus Hommels, Lakestar

Oren Zeev · Feb 2, 2026

Investments that look weird or wrong at the time are the ones that produce the greatest outcomes, because few other startups pursue them and you get two or three years without real competition to build a moat

If it looks wrong, 15-20 other startups won't be doing it, giving years of clear air to build a real moat; contrarian plus right is the recipe for great outcomes

Scope: only if you turn out to be right — being contrarian and wrong doesn't help

5:10 20VC: 50% of Funds Will Go Out of Business | Why Growth Expectations Today are BS and Will Not Last | Why Oren Zeev Takes $0 Management Fees But 30% Carry | Why GPs Should Not Tell LPs Their Strategy

Gokul Rajaram · Mar 16, 2026

Mike Moritz backing Instacart is one of the best venture bets ever made

He had burned roughly $370M on Webvan less than a decade earlier in the same space, so re-entering it required genuine first-principles thinking and courage

Scope: calls it a paradoxical pick

46:28 20VC: The 8 Moats of Enduring Software Companies: How to Analyse for Durability and Defensibility in a World of AI | Why Dropouts are "AI Maxing" the World & Remote Early-Stage Companies are Dying with Gokul Rajaram

Harry Stebbings · Jun 20, 2026

A VC isn't doing their job if friends they sense-check deals with don't think the deal is stupid or crazy

8:50 20VC: Why Remote Work is White Collar Fraud | Why Revenge and Patriotism are the Best Founder Traits | Two Questions Every Founder Needs to Ask | The Wild Story of Raising $1BN from Masa Son in an Hour Long Meeting with Ryan Peterson, Founder @ Flexport

Julien Bek · Aug 24, 2026

Investments that turn small dollars into very large returns have to be controversial at the time

The Airbnb seed is the archetype — Chesky had been turned down by most firms and air mattresses on floors sounded like a bad idea, yet it became one of the firm's highest money-on-money returns, which required conviction not just initially but to keep investing

Scope: not all best deals were controversial; Airbnb detail is secondhand — he wasn't there

18:29 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

David George · Dec 15, 2025

Finding opportunity where others don't usually means seeing a magnitude of greatness that isn't obvious on the surface — it does not require the company to be unknown or unloved

They invested in Anduril when it had one program of record (border towers) on a bet it could be massively multiproduct, and in OpenAI before ChatGPT existed

43:03 Edge comes from seeing magnitude not obscurity

David George · Dec 15, 2025

The best growth investments are ones where there is a theory that the core market can be bigger than expected, or where the founders have a demonstrable advantage in figuring out the next product

Stripe, SpaceX with Starlink and Waymo were market-expansion cases; with Anduril they knew border towers would be big but backed the team to find more, and they never would have predicted autonomous fighter jets — market-leading product and tech people tend to find the next product area

46:06 Market expansion potential or a team that finds the next product

Julien Bek · Aug 24, 2026

The best investments in a fund are consistently the ones where the sponsoring partner had the highest conviction, not the ones optimized for ownership and dollars

Reviewing decades of fund returns at offsites, every attempt to be cute by adjusting ownership or check size fails; the pattern that repeats across funds is sponsor conviction — as with Sean pushing the SpaceX deal through a hostile vote and forcing partners to see it in person

16:56 Sponsor conviction not ownership optimization

Matt Murphy · Jul 27, 2026

Anthropic was an easy conviction investment because Dario had the unique insight and conviction that the frontier model was the one big opportunity, his technical stature attracted the best researchers, and pre-revenue benchmarks already matched or beat ChatGPT

It's a massive market and such markets always support an alternative; Anthropic had the leadership and technical depth to be it

4:23 The biggest winners can be obvious easy convictions

Marc Andreessen · Mar 30, 2026

When a company genuinely is a diamond in the rough, there is usually a real reason for it — either the company is fundamentally offside (wrong place, wrong structure) or the founder is so disagreeable they have alienated the mainstream firms — and that reason typically becomes a big problem later

The reason a good company was overlooked is rarely accidental; ornery founders fixated on terms, control and VC villainy alienate six mainstream firms before you meet them

33:34 Diamonds in the rough are overlooked for a real disqualifying reason