I’ve had a few conversations in the last few days about a VC’s track record, which is a schedule of investments over the years with the wins, losses, and everything else.
I was seeing an old friend who has been in the VC business as long as I have yesterday. We got to talking about the notion of a track record. I told him that what is most valuable in a track record to me is not the gross returns, IRRs, or even big winners. What is most interesting and valuable to me is the cumulative experience you can see by looking at the track record. You can see how long someone or some firm has been at it, their mistakes, their successes, how they have evolved as investors, style changes, risk appetite, and a lot more.
Then this morning, I was talking with one of my partners about USV’s track record and we both were cringing at some of our big mistakes. Neither of us were focused on the winners. We were just stung by the mistakes.
And I think that’s important. We should not stare too much at our big winners. We don’t learn that much from them. We should stare at our big mistakes, because we do learn a lot from them.
I am proud of USV’s track record. We have produced fund after fund of strong performance, something that is not easy to do. But I don’t think that is what differentiates us in the market. And we rarely talk about it with entrepreneurs. We do talk about the difficult lessons we have learned over the years and how those lessons may allow us to help them avoid a similar fate. And, ironically, maybe that is what allows to produce the track record we have.