Does a venture investor's edge come primarily from access to deals or from picking skill?

Frank Rotman · Aug 11, 2023

Only a single-digit percentage — roughly 2–4%, or about one in fifty — of venture-backed companies ever become public companies, so venture investors have to be extremely good at picking

Crunchbase data across vintages shows the IPO rate is 2–4%, not 8–10%, and venture returns require an IPO-able event or a mega sale like Honey or Credit Karma

Scope: varies by vintage

23:52 20VC Roundtable: NEW FORMAT: Why the Seed Investing Model is Broken, How to Make Money at Seed Moving Forward; Who Wins and Who Loses, Why Venture Value Add Platforms are BS and Failed and Why There Will be an IPO per Week in H2 2024

Harry Stebbings · May 19, 2025

The fact that a company like Duolingo received only one term sheet — from one of the best firms — is evidence that top-tier firms genuinely have superior picking ability.

He sees this pattern repeatedly: the best firms are the ones who recognize quality when nobody else does, and their data-proven track records reflect real picking skill.

Scope: He frames it as uncontroversial

62:21 20VC: Duolingo Co-Founder on Why $3M is Harder than $100M to Raise | Why You Should Always Take Tier 1 VCs Even at Worse Terms | Why Europe Can't Win Unless the US Screws Up | How AI Impacts the Future of Work and Education with Severin Hacker

Miles Dieffenbach · Aug 4, 2025 · hedged

Picking skill remains the true moat of early-stage venture capital.

Some of the greatest venture outcomes — Airbnb, Uber, SpaceX, Amazon — struggled mightily to raise their seed rounds, so identifying them early was a genuine skill.

Scope: "I hope and pray" capital abundance at seed hasn't ended this; "but we'll see"

16:23 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

Nabeel Hyatt · Apr 4, 2025

An inbound, funnel-oriented investing model forces investors into maximal marketing and fast transactional no's rather than real evaluation

If your job is to fill the top of the filter, you must tweet and market constantly and then rush through enormous inbound to say no as quickly as possible

13:28 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 · Apr 4, 2025

You cannot run a high-service investing model and a high-volume investing model at the same time

High service constrains you to only two to four checks a year

26:24 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

Bucky Moore · May 5, 2025

Poor picking is a common failure mode for GPs at large, high-deal-flow funds

With so many founders coming through the door it is very hard to distinguish the nine-out-of-ten company from the ten-out-of-ten one, and without disciplined prioritization you get it wrong

Scope: applies to firms with very large top of funnel like Lightspeed or Kleiner Perkins

35:42 20VC Exclusive: Why Mega Platforms Will Win in VC | Why You Cannot Do VC If You Do Not Do Pre-Seed | Why Market Sizing is BS | Where Will Foundation Models Build/Buy Apps vs Where Will They Not with Bucky Moore

Semil Shah · Nov 21, 2022

At early stage, venture is equally a game of access and of picking

You need access to creative people and must select from those who come your way; generating repeatable access is very hard and selecting is very hard

20:24 At early stage venture is equally a game of access and picking skill

Chandra Narayanan · Mar 13, 2024

Sequoia's edge comes from the quality of its investors, a brand that guarantees deal access, diversity of skills within the partnership, and its collaborative decision-making process

Nobody refuses a meeting with Sequoia, so they see all the leads, and the partnership combines very different types of skills in a collective decision

16:16 Brand driven deal access diversity of skills and collaborative decision making together constitute the edge

Chris Sacca · Oct 11, 2021

The right discipline for a venture fund is a four-part formula: the best companies can and want to find you, you select the very best of those, you own enough for the deal to matter, and you can materially improve that company's odds of success

No fund can see every deal anymore, and he learned from public-markets trading that dart-throwing without added value doesn't work; small exits after a month of selling netted him almost nothing

52:00 Genuine edge requires inbound access selective picking adequate ownership and real value add together

Miles Dieffenbach · Aug 4, 2025

Venture is both an access and a picking game, but the mix depends on the firm: for large multistage firms deploying big checks it's roughly 70% access / 30% picking, while for small nimble early-stage funds it's roughly 70% picking / 30% access.

16:59 The access versus picking mix depends on firm size and check size

Saam Motamedi · Jul 15, 2024

Sourcing is the hardest and most important of the three venture skills, and servicing is not actually required to be a great investor

You are only as good as what you source; staying relevant and finding new pockets of entrepreneurs before anyone else is incredibly difficult, and if you find the right founders you may need no servicing at all — plus a nine-person team must out-source firms with 50 investors

51:29 Sourcing is the hardest most important skill servicing is unnecessary