![]() Of the 113 companies that were picked from over 2 years ago, 89 have raised an additional round of financing that we could participate in with our hypothetical investment (“what about the other 24?” is discussed at the end). The purpose of this post is purely to quantify how this list would have done if someone was able to make the investments. This very obviously presents several flaws, including the “How is someone with no track record going to participate in these financing rounds?” and I’ll address some of those in the caveats section below. Square is now publicly traded, so our initial $3.175m Series B investment would currently be worth $74.24m, which is a return of 24.4X. From additional rounds of financing, the Series B shares were diluted from 13.6% ownership to 10.49%, so we would presently own 1.05% of the company. ![]() Our scenario would invest 10% of the Series B amount of $31.75m (or $3.175m) giving us an initial ownership of 1.36% of the company. Their Series B was 6 months after the pick, where they raised $31.75m at a $232.92m post-money valuation, giving the Series B investors 13.6% of the company. According to Pitchbook, they previously raised $10.12m total through their Series A that closed 16 months prior. ![]() I used data from Pitchbook to look at the next round of financing after I “picked” the company, which usually has a post-money valuation amount (to calculate initial ownership), and also has the diluted ownership of those shares today.Īs an example, the initial list picked Square on April 10th, 2011. We also don’t use techniques like pro-rata to minimize dilution to double down investments that seem to be doing well during later rounds of financing as this would be impossible to do objectively in hindsight. ![]() I settled on blindly investing 10% of the next round amount of financing for the companies after the pick at any stage, at any valuation, and at any date in the future. It’s clearly easier to settle on the “right investment approach” with data in hindsight to maximize returns, so my approach to measuring everything attempts to mitigate that. Each approach and methodology has several flaws, and I’ll attempt to outline the tradeoffs with my own for this at the end – there are a LOT here. Even investors that do this for real have a hard time with valuing a private company portfolio, and they have full disclosure into all the terms and financials of the rounds and companies they invest in. It is not a straight forward process to quantify the performance of a list of privately held companies. The results exclude companies added in the past 2 years as they haven’t had enough time to materially change in value, but I’ll highlight some of my favorites from those at the end. The Wayback Machine has been taking snapshots of this list over time, which should help verify the dates that the companies were picked and that I haven’t changed anything (not perfect, but good enough). The initial list contained 37 startups, and over the last 6 years I’ve been periodically adding companies to the list that I like, bringing the total to 144 startups today. This post is intended show how the startup investment picks list would have done as a venture capital portfolio as well as provide a few observations and learnings looking back on everything. Back in 2011 I wrote a post titled “Startup Investment Portfolio Game” where I started a list of “companies I would invest in if I could” to look back on in the future.
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