I'm not aware of any body of data that contradicts the claim that returns will generally be higher (as a function of initial investment) for those who win that were most undervalued at the point of investment
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Replying to @webdevMason
Most undervalued founders today: - women - URMs VC data is what it is So, VC backers are either dumb, or they are pursuing maximal returns I would like to change their calculus on the latter
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Replying to @birsic @webdevMason
I’m quite away this was not your original point. I’m a solid reader. I took it another direction. Hoping that’s agreeable.
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Replying to @birsic
I'm not sure whether female founders are broady undervalued, but you can't really go wrong saying so! I just think someone should go ahead and clean house if they really believe it. The social capital for saying so is free.
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Replying to @webdevMason
I find this compelling data on that front http://fortune.com/2019/01/28/funding-female-founders-2018/ … And I could not agree more! To my point, that is the only things LPs care about, the only way it will change.
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Replying to @birsic
Has anyone looked at market cap diffs for female- vs. male-founded companies, vs. investment? If there's no substantial difference, someone should go get rich. If there is, that's more a more explanatory property
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Replying to @webdevMason
First Round probably did the most quoted study, with 60+ percent higher returns from female founders, but they excluded Uber (because it was an outlier, in a market defined by outliers) so their results are viewed with skepticism by those in the know (re Uber exclusion)
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Replying to @birsic @webdevMason
That chart and fortune article make a pretty convincing case for the underfunding of female founders. This does mean that the marketplace has provided an opportunity to invest in female founders and achieve significant profits.
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Replying to @JamesonHalpern @birsic
They kinda... don't! Unless you assume that female founders are, as a group, statistically identical to male founders in e.g. the industries they're tackling (ex: tech vs. consumer goods). This is a *really* complicated question that's very difficult to discuss critically
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Replying to @webdevMason @birsic
Okay, sure women founders may start relatively more consumer companies and fewer high tech and biotech companies. An those consumer companies may require much less capital. But as the article states, its not just transaction size, but total # transactions as well.
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You would expect transaction size & # of transactions to trend together in this context. VCs care a lot more about the returns they can expect in a range of plausible best-case scenarios than anything else. There's a lot of overhead. Within reason, larger deals are preferable.
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Replying to @webdevMason @JamesonHalpern
There’s a lot of overhead in what?
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Since you decided not to respond, allow me to opine that VC is hands down one of the least overhead heavy industries in existence. I spent 5 years at a quality firm in VC, and switching industries, to quote a favorite film, ‘tis but the work of a moment.
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