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The Full Ratchet

Investor Stories 465: Pricing Too Late, Selling Too Early, Investing Too Fast — Hard Lessons from Top VCs (Ramanujam, Cohen, Orlovski)

6 min episode · 2 min read

Episode

6 min

Read time

2 min

Topics

Investing, Startups, Fundraising & VC

AI-Generated Summary

Key Takeaways

  • Early Pricing Intervention: Ramanujam's firm discovered after 100+ office hours that monetization strategy is critical at pre-seed and seed stages, not just Series A/B. Founders who delay pricing train customers to expect more for less, permanently damaging value capture potential.
  • Exit Timing Outweighs Deal Selection: Cohen argues that when top investors sell matters more than what they invest in — a counterintuitive claim backed by 20 years of experience. A single exit decision can produce a 100x difference in returns versus a near-zero outcome.
  • Systematic Liquidity Rules: Cohen recommends establishing a predetermined sell threshold — such as liquidating 20% of a position at a target valuation — and maintaining discipline around it. Even rule-based approaches fail sometimes, but consistent frameworks outperform reactive decisions over time.
  • Deployment Patience Under LP Pressure: Orlovsky identifies investing too quickly after fund close as a recurring mistake. LPs often pressure managers to deploy within months, but Orlovsky advocates a sniper-like approach: waiting indefinitely until conviction is high before committing capital.

What It Covers

Three VCs — Madhavan Ramanujam of 49 Palms, David Cohen of Techstars, and Viktor Orlovsky of R136 Ventures — share distinct hard-won lessons on pricing timing, exit decisions, and deployment pace in venture investing.

Key Questions Answered

  • Early Pricing Intervention: Ramanujam's firm discovered after 100+ office hours that monetization strategy is critical at pre-seed and seed stages, not just Series A/B. Founders who delay pricing train customers to expect more for less, permanently damaging value capture potential.
  • Exit Timing Outweighs Deal Selection: Cohen argues that when top investors sell matters more than what they invest in — a counterintuitive claim backed by 20 years of experience. A single exit decision can produce a 100x difference in returns versus a near-zero outcome.
  • Systematic Liquidity Rules: Cohen recommends establishing a predetermined sell threshold — such as liquidating 20% of a position at a target valuation — and maintaining discipline around it. Even rule-based approaches fail sometimes, but consistent frameworks outperform reactive decisions over time.
  • Deployment Patience Under LP Pressure: Orlovsky identifies investing too quickly after fund close as a recurring mistake. LPs often pressure managers to deploy within months, but Orlovsky advocates a sniper-like approach: waiting indefinitely until conviction is high before committing capital.

Notable Moment

Cohen reveals that a portfolio company can collapse from a billion-dollar valuation to zero faster than it took to reach that peak — a dynamic that makes the sell decision more consequential than the original investment thesis.

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Episode Transcript

Today's episode of TFR is brought to you by .techdomains. The right .com is usually taken, and adding extra words weakens your signal. I see thousands of decks every year, and a clean domain still matters. That's why founders choose .tech. It's simple, modern, and sends the right signal. Secure your .tech domain early. And this episode of TFR is brought to you by the American Arbitration Association, where smart startups and investors turn for fast, efficient, and cost effective dispute resolution. Visit adr.org/tfr to learn more. Now here's the episode. Welcome to the podcast about venture capital, where investors and founders alike can learn how VCs make decisions and reach conviction. Your host is Nick Moran, and this is the full ratchet. Welcome back to TFR. On today's special segment, we ask guests to tell the most important lesson that they've learned in their career. Here's the segment called lessons learned. On today's special segment, we have Madhavan Ramanujam of forty nine Palms. What's the greatest lesson you've learned in your work with VCs and startups? One of the key lessons that I learned in the last, let's say, you know, six months or so that we have been, you know, getting the fund off the ground is when we, you know, when we started thinking about our own thesis, we thought that we would be more relevant in series A or series B, especially after a product market fit is established, there is a monetization model in place and people need to scale it. That's probably when we can lean in and actually operate. The biggest learning and we have now done office hours with over a 100 companies. And what we have actually seen is the, our thesis is really relevant even in the pre seed and seed stages, because most of these founders are, you know, thinking about how to navigate POCs, how to actually have commercial discussion, how do I charge? It goes back to the cost dynamics and the value capture because the founders know that they're building something of insane value, but how do you capture it from the get go? Because if you don't, you start training your customers to expect more for less. So the big learning for us has been that our fit is actually probably more pre seed seed and a, and of course we can follow on in one more round, in terms of like our reserve strategy. But that was a good learning that, we are you know, our expertise is needed much more earlier than what we even thought of it. On today's special segment, we have David Cohen of Techstars. And what's the biggest mistake or the hardest lesson you've learned as an investor, and what's the story behind that lesson? I'll I'll talk a little bit about, liquidity. You know, it's obviously a hot topic today for LPs, for for fund managers, but it's a hot topic for founders also. Right? That, you know, …

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