Swinging big...

I can tell you exactly how venture investors think with a single story…

In a recent appearance on The Motley Fool podcast, Stanford Professor Ilya Strebulaev retells a story from one of his courses.

Each year, Ilya invites a panel of VC Partners to his MBA class to teach the principles of fundraising and the process of venture investing.

One year, a very famous, very successful VC spoke to Ilya’s class. This investor had deployed billions of dollars, generated hundreds of billions for his LPs, and was worth well over a billion himself.

By all accounts, he was one of the most talented, accomplished individuals in his industry.

Then Ilya asked him: “What’s your life’s biggest regret as a venture capitalist?”

The investor began to get teary-eyed as he told a story from earlier in his career. About 20 years ago, he received a call from a friend offering to introduce him to a new potential investment.

It was a company started by two graduate students who were building a brand new kind of search engine out of their garage.

To the investor, this seemed pointless. There were already dozens of other search companies being built, most of which had a substantial head start over these two nameless academics.

He declined the meeting.

Over the following years, the two computer scientists went on to build Google, one of the most successful companies of the 20th century.

This would have been a career-defining investment for the VC, and he passed on it. Two decades later, the missed opportunity clearly still haunted him.

This is such a great story because it perfectly illustrates just how personal the business of investing is to most venture investors.

The advice that Ilya gives to all of his MBA students is this:

Venture Capitalists care about one thing and one thing only. Home runs.

So, if you’re trying to raise capital for your company, you better be swinging as big as they are.