Investor Stories 438. The Deals That Got Away: LinkedIn, Snowflake, and Zeitview (Jiang, Schuler, Rizik)
Episode
7 min
Read time
2 min
Topics
Career Growth, Investing
AI-Generated Summary
Key Takeaways
- ✓Valuation discipline matters: Paying 30-40x revenue multiples at late Series A or B stages creates compression risk, requiring unrealistic growth to generate returns even in quality companies.
- ✓Revenue signals reduce risk: LinkedIn opportunity at pre-revenue stage and billion-dollar valuation proved too speculative, demonstrating how lack of financial traction increases pass rates despite strong network effects.
- ✓Downturn experience counts: Investors who never experienced market corrections during 2010-2020 believed high valuations would self-correct, resulting in 2020-2021 vintage funds now sitting underwater across multiple prior vintages.
What It Covers
Three venture investors share anti-portfolio stories: passing on LinkedIn pre-revenue at billion-dollar valuation, Snowflake due to margin concerns, and overpriced 2020-2022 vintage funds.
Key Questions Answered
- •Valuation discipline matters: Paying 30-40x revenue multiples at late Series A or B stages creates compression risk, requiring unrealistic growth to generate returns even in quality companies.
- •Revenue signals reduce risk: LinkedIn opportunity at pre-revenue stage and billion-dollar valuation proved too speculative, demonstrating how lack of financial traction increases pass rates despite strong network effects.
- •Downturn experience counts: Investors who never experienced market corrections during 2010-2020 believed high valuations would self-correct, resulting in 2020-2021 vintage funds now sitting underwater across multiple prior vintages.
Notable Moment
A fund pitching during the bubble claimed best companies would overcome 40x revenue entry multiples, but three years later all their funds including prior vintages are underwater.
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