20VC: Why Small Funds Outperform Large Funds & AUM is a Vanity Metric | Why 99% of Investments in AI Startups Will Go To Zero | Being a "Traction First" VC & Investing Lessons from Investing in Canva and Missing Figma with Nikhil Basu-Trivedi
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Twenty Minute VC
4.4 • 637 Ratings
🗓️ 6 September 2023
⏱️ 61 minutes
🧾️ Download transcript
Summary
Nikhil Basu Trivedi is Co-Founder & General Partner at Footwork, an early-stage focused venture firm investing its first fund. In his venture career, he has invested in the early rounds of several companies that have exited or are currently valued at over $1B, including Athelas, Canva, ClassDojo, Color Health, Frame.io, Imperfect Foods, Lattice, and The Farmer's Dog. Prior to Footwork, Nikhil was a Managing Director at Shasta Ventures, on the investment team at Insight Partners, and on the founding team at Artsy.
In Today's Episode with Nikhil Basu Trivedi We Discuss:
1. From Summer Intern to Founding a Firm: The 13 Year Journey:
- How did Nikhil first make his way into venture as an intern at Insight Partners in NYC?
- What does Nikhil know now that he wishes he had known on his first day in venture?
- Why does Nikhil advise all young VCs to "not look at their business card"? Why does title not matter in venture?
- Should founders meet with Juniors as well as GPs and more senior people?
2. Small Funds Outperform Large Funds:
- Why does Nikhil believe that small funds outperform large funds?
- Why is AUM the biggest bullshit metric in VC?
- How does Nikhil advise seed stage founders who have offers from seed firms for smaller rounds at lower valuations and are weighing them against larger rounds with higher valuations from multi-stage funds?
- Does Nikhil believe that platform value-added services really provide any value?
3. The Art of Investing:
- What has been Nikhil's biggest investing win? How has it changed his approach to investing?
- How does Nikhil prioritize between people, traction, and market? What is most important?
- What has been Nikhil's biggest investing miss? How has that changed his approach?
- Does Nikhil believe the great founders are immediately obvious?
- Why is market size the single question that keeps Nikhil up the most?
4. The Dysfunctions of Venture Capital:
- What are the single biggest areas of misalignment between GP and LP?
- What do many GPs see and know well that LPs should know and see more of?
- What are the biggest ways that decision-making breaks down in a venture fund?
- Why does Nikhil believe that so much of the investment in AI is going to go up in flames?
Transcript
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| 0:00.0 | My firm belief is that small funds outperform bigger funds. It is incredibly difficult to have |
| 0:06.2 | a 5x net return on a billion-dollar plus fund. I honestly don't know if there's great AI-first |
| 0:12.9 | opportunities for us at Footwork to invest in. Just the insane hype cycle around it at the moment. |
| 0:18.1 | We over-rotated once again very, very quickly towards excitement |
| 0:22.4 | here. I don't think that there's a lot of AI-enabled companies that are going to be for us. |
| 0:27.6 | Too expensive and there's just so much competitive noise. This is 20 VC with me, Harry Stebbings, |
| 0:32.3 | and I'm so excited for the show state because I first met this guest seven years ago following |
| 0:36.4 | a cold Facebook message. |
| 0:38.0 | And then we spent time together when I was job hunting as an 18 year old in San Francisco |
| 0:41.9 | wanting to be in venture. A lot has changed for both of us since then. And I'm thrilled to welcome |
| 0:46.1 | back to the hot seat, Nikiel Basu Trevedi, co-founder and general partner at Footwork. Now, |
| 0:50.8 | previously, Nicol is invested in the early rounds of Canva, Class Dojo, Frame.I.O., |
| 0:55.8 | Inperfect Foods, Lattice and The Farmer's Dog. And prior to footwork, Nicol was a managing director |
| 1:00.9 | at Shasta Ventures and on the investment team with Insight Partners. But before we dive into the show |
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... |
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