Just keep moving

A few weeks ago, I received one of the hardest emails that a founder will ever have to send…

A portfolio company was shutting down after running out of money. Unfortunately, I can’t get into the details. But, they built an incredible product with a world-class team that had just fallen short of raising a Series A to continue building their vision.

The founding team was obviously devastated.

Of course, the investors were saddened by the news, too.

The first time you experience this wind-down process as a new investor, it can be very disorienting. You begin to think about what you could have done differently to help prevent that outcome. You wonder which of your other portfolio companies might be on the brink of collapse. You question your ability to pick companies that will eventually become successful. You might even reevaluate your entire thesis.

This is normal. My advice to new investors is always this: You only need a few big winners.

It’s upsetting for everyone involved to see a company go to zero. You don’t usually have all the answers in the moment. Those will reveal themselves to you as time passes.

But, you need to quickly focus back on your other portfolio companies that are thriving. If you’re doing your job right, you’re going to have more losses than winners — That’s the job.

So, whenever this inevitably happens to you, here’s what I recommend:

1. There’s no easy way to process this.
2. Give yourself the opportunity to mourn the loss and speak to close friends and colleagues if you need it.
3. Quickly share the most important information with LPs and syndicate investors during the wind-down process.

Transparency is key. How you handle the hard stuff and the small stuff sets the stage for how you handle the good stuff and the big stuff.