Last month, we invested in one new startup every day - a rate that now ranks us as the most active venture investor in the world (or at the very least, among the top three.) These deals include some of the best new startups to be found anywhere. We're planning on keeping up this rate of investment for the next three years, using a staff of less than ten people. How is this possible?
When we finished investing our H1 capital and started working on our strategy for H2, we knew what we wanted to do: we wanted to clean house with respect to existing processes and find a better approach to investing in early stage companies.
One of the drivers? Ego - or over-reliance on it. We were not exactly comfortable with the level of "gut feel" investing that we saw ourselves and others doing (relative to the data-driven, technology-assisted managers of other asset classes), and as we started talking with other VCs, we became convinced that in general, deal funnels were not deep enough, the tools used to analyze and filter them not sharp enough, and the decisions not informed as much as they might be. Everywhere we looked, we saw overworked resources, working hard to compensate for a lack of data, and manual processes.
Information on the startups themselves remained "siloed" (or invisible), with accelerators and founders lacking even the basic ability to measure momentum or gain understanding of their competitive environments. Early-stage valuations seemed to us to be, in many cases, simply made up or plucked from thin air. Mentor programs were not resulting in quantifiable outputs, and inefficiencies were visible everywhere we looked - especially with respect to connecting companies to later-stage capital, be it through demo days, or referral networks.
It took three years, but we've now investing on the back of a better system. There's a longer essay a blog or two back that talks about the "four pillars" of our Hatcher+ Stack - about how we're using AI-powered data-mining and analysis, large amounts of automation, and a fantastic network of like-minded investor groups to scale and create a massively diversified global portfolio... but what this story is really about is our desire to manifest the two things that VCs really know how to do: scale, and disrupt.
Advising companies on how to disrupt existing businesses is what VCs do best. An ability to scale is the core attribute that every VC seeks in every business they invest in. The difference is, this time it is the VC - Hatcher+ - that has found a way to successfully disrupt and scale itself. It has found a way to "disrupt the disruptors".