Does never having an investment go to zero indicate a venture investor isn't taking enough risk?

Martín Escobari · Nov 11, 2022

A low loss ratio is not a problem to be fixed — he rejects the common advice that he should be losing money more often

GA as a firm loses money only 2% of the time and he sees no need to raise that

32:38 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

Martín Escobari · Nov 11, 2022

The first rule of investing is don't lose money — capital preservation should dominate, even though Silicon Valley disagrees

Scope: self-described as old-fashioned; explicitly against Silicon Valley orthodoxy

39:56 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

Shu Nyatta · Jul 31, 2023

In a concentrated 10-to-15 company growth portfolio the target loss ratio should be effectively zero

Scope: stated as the ideal; growth stage, concentrated portfolio

31:44 20VC: Marcelo Claure & Shu Nyatta on Lessons from Investing $7.5BN at Softbank & Why Dumb Money has Gone, Why "LATAM is Under Construction" and the Next 10 Years Will Be the Best & Investing Lessons from Missing Nubank & OpenAI & Investing in FTX

David Frankel · Oct 14, 2024

Venture's payoff asymmetry — you can only lose 1x but can make 3,000x — is the most unfair feature of capitalism and should shape how investors think about loss

Downside is capped at the money invested while upside is unlimited

55:56 20VC: Investing Lessons from FC Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

Harry Stebbings · Oct 14, 2024 · hedged

An investor who has never lost a deal may not be taking enough risk

Scope: concedes the Index investor's Datadog and Wiz results speak for themselves

56:19 20VC: Investing Lessons from FC Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

Harry Stebbings · Mar 10, 2025

Never having had a deal go to zero is evidence that an investor is not taking enough risk

29:55 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

Bill Gurley · Dec 6, 2021

Venture investors should be more optimistic and risk-seeking when evaluating deals rather than getting overly obsessed with downside protection

The asymmetric risk structure of venture returns means upside matters far more than protecting the downside

Scope: applied to evaluating each individual deal

46:47 20VC: Bill Gurley and Michael Eisenberg on The First Signs of an Impending Bust, What Happens with a Market Crash, How Do Public Markets Impact Private Valuations & The Biggest Lessons from 20 Years Investing in Venture

Trae Stephens · Apr 3, 2024

Downside protection is silly; it should be all upside maximization

Looking back at the portfolio, whether they got their money back has never affected fund performance — only $10B+ category-defining winners move the needle for a fund their size, everything else rounds to zero

Scope: scoped to funds of Founders Fund's size

32:40 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything

Mamoon Hamid · Oct 21, 2024

Investors should not wear big losses as a badge of honor; even at early stage you can apply more precision and avoid putting more money in to lose more

Your job is to invest the first five to fifteen upfront; losing five on a seed check is fine, but follow-on losses are avoidable with more precision

47:52 Avoid unnecessary follow on losses through precision rather than glorifying losses

Jake Saper · Mar 10, 2025

His unblemished record does mean he hasn't taken enough risk, but part of it is that B2B software businesses with recurring revenue models offer relative downside protection

Recurring revenue models plus a disciplined entry point give structural downside protection, assuming the diligence was done well

30:00 Recurring revenue b2b software gives genuine downside protection not just risk aversion