Should every partner need equal conviction on a deal, or only the sponsoring partner?

Danny Rimer · Jun 17, 2024

The purpose of a partnership vote is less to filter deals than to test whether the sponsoring partner has genuine conviction

A sponsor's visible excitement and willingness to push the partnership is the strongest signal; a partner who is scratching their head is unlikely to get it done

Scope: outlier deals are welcome if the sponsor shows conviction

9:12 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

Eric Vishria · Sep 25, 2024 · hedged

Only the sponsoring partner needs all-in or hell-no conviction on a deal; the other partners' conviction need not match

The non-sponsoring partners necessarily have less information, so their strength of conviction shouldn't be expected to match the advocate's

Scope: "probably" for the sponsor; "I don't know that they have to be" for the others

49:24 20VC: Benchmark's Eric Vishria on Where is the Value in AI: Chips, Models or Apps | Why Nvidia Will Not Be The Only Game in Town | The Commoditisation of Foundation Models | Which AI Apps Have Sustaining Value vs Hype and Short Term Revenue

Harry Stebbings · Oct 21, 2024

Voting structures in venture firms are nuts; any partner should be able to write a check because the best deals are often non-consensus

The best deals are often nonconsensus, so requiring majority approval screens them out

Scope: small partnerships

42:24 20VC: Kleiner Perkins' Mamoon Hamid on Investing Lessons from Leading Rounds in Figma, Slack and Rippling | Lessons Building a Generational Defining Firm with Kleiner Perkins | AI: Where Value Accrues, Startups vs Incumbents & Scaling Laws

Mamoon Hamid · Oct 21, 2024

Early-stage venture firms should not have voting structures; you should defer to the conviction of the partner wanting to lead, testing it through in-person discussion

Every partner must be able to put themselves on the line with their own conviction, and sitting around the same table lets partners read body language and genuinely test each other's conviction over days

Scope: early stage venture specifically

42:50 20VC: Kleiner Perkins' Mamoon Hamid on Investing Lessons from Leading Rounds in Figma, Slack and Rippling | Lessons Building a Generational Defining Firm with Kleiner Perkins | AI: Where Value Accrues, Startups vs Incumbents & Scaling Laws

Jason Lemkin · Nov 30, 2022

Partnership unanimity carries no information about outcomes — his unanimous-no and unanimous-yes investments are likely to end up equally successful

Algolia was an all-no decision and TalkDesk an all-yes decision, and both look set to produce comparable outcomes

Scope: based on his own deal history

38:39 20VC: Jason Lemkin on Why Founders Do Not Care About Their VCs Anymore, Why Zoom Made Us All Worse Investors, Why 80-90% IRR Should Have Been Warning Signs and the Algolia Journey From Seed to $2.25BN Valuation

Pat Grady · Jul 8, 2024 · hedged

Whether an investment decision is consensus or contentious does not predict outcome; what matters is the presence of genuine conviction from someone

Sequoia has recorded numeric votes on every investment since 2014, and the data — though not conclusive given how few outliers exist — shows no signal from consensus versus contention, while investments with a strong high vote differ from ones where everyone is lukewarm

Scope: 'best we can tell'; ten years of vote data is not conclusive because outliers are so rare

58:59 20VC: The Sequoia Investment Process | Investing Lessons from Doug Leone, Roelof Botha & Alfred Lin | Sequoia's Framework for Analysing Founders | The True Benefit of Having Sequoia on a Cap Table & Sequoia's Biggest Threat with Pat Grady

Harry Stebbings · Jul 22, 2024

Partnership voting structures in venture are bullshit and should be abolished

Partners vote strategically at a six out of ten so they can claim they were a yes on winners and a weak yes on losers, which injects unnecessary politics; if you've hired a partner and given them meaningful carry, they should be free to do the deals they want

45:29 20VC: How I Lost Airbnb at Seed Because of an Exploding Term Sheet | Investing Lessons from Roelof Botha & Peter Thiel | Why VC is Less Collaborative Than Ever and Great Companies Are Being Destroyed by Too Much Cash with Kevin Hartz @ A*

Eric Vishria · Sep 25, 2024

Partner votes on investments should only ever be genuine conflicts of conviction, never strategic — using votes strategically is managing politics rather than making the best investment decisions

The point of quantifying feedback is to surface real conviction; anybody voting against does it apologetically

48:35 20VC: Benchmark's Eric Vishria on Where is the Value in AI: Chips, Models or Apps | Why Nvidia Will Not Be The Only Game in Town | The Commoditisation of Foundation Models | Which AI Apps Have Sustaining Value vs Hype and Short Term Revenue