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š¤Æ Silicon Valley Secrets
Investor Edition
Hey there! š
Grab your chai (or coffee) and get ready because this week, weāre diving into what makes Silicon Valley's biggest investors tick.ā
Straight from Stanfordās MBA classroom with Professor Ilya Strebulaev, we're uncovering the principles that fuel the most innovative companies in the world.ā½
These arenāt your everyday finance lessonsāthese are the real strategies powering the top venture capitalists.š
Ready to learn how the pros do it? Letās jump in.šÆ
ā ļøRisk Isnāt the VillaināItās Your Best Friend
You might think itās all about luck or stumbling on the next big thing, but investors here operate with a clear strategy. These arenāt just gut instinctsāthereās a philosophy behind how they pick which companies to back. š
šļø Key Takeaways from Silicon Valley's Investment Playbook:
š Some Metrics to Keep in Mind:
ā¢ 60% of startups fail to return the capital invested in them. Yet, just a few big wins can cover the losses of many.
ā¢ The average Silicon Valley unicorn reaches a $1 billion valuation in 7 years.
ā¢ 80% of successful startup exits come from industries that weren't trendy when they first launched.
šļøActionable Insights from Strebulaevās Stanford Class:
1. ā Donāt Obsess Over Valuation: Investors donāt lose sleep over a startupās valuation. Understanding the business model, the market potential, and the team behind the scenes is far more important. š
Valuation is often a distraction from what really mattersālong-term growth.š2. ā ļøBeware of the Hype: Hot trends come and go, but true value lasts. Many startups will pitch investors based on the latest buzzwords (AI, blockchain, whatever the flavor of the month is).š¤
What smart investors look for is how these trends translate into real-world solutions and actual value creation.š§3. š°Small Bets Can Lead to Big Payoffs: Strebulaev emphasized how investors donāt need to hit a home run with every investment. In fact, they know that most investments wonāt become unicorns. š¦ But the few that do? They more than makeup for the ones that donāt.
BofA says +80% of young, wealthy investors want this assetānow it can be yours.
A 2024 Bank of America survey revealed something incredible: 83% of HNW respondents 43 and younger say they currently own art, or would like to.
Why? After weathering multiple recessions, newer generations say they want to diversify beyond just stocks and bonds. Luckily, Masterworksā art investing platform is already catering to 60,000+ investors of every generation, making it easy to diversify with an asset thatās overall outpaced the S&P 500 in price appreciation (1995-2023), even despite a recent dip.
To date, each of Masterworksā 23 sales has individually returned a profit to investors, and with 3 illustrative sales, Masterworks investors have realized net annualized returns of +17.6%, +17.8%, and +21.5%
Past performance not indicative of future returns. Investing Involves Risk. See Important Disclosures at masterworks.com/cd.
One-quarter of unicorn #founders worked in scientific research or technology development prior to founding a #unicorn.
22% worked as CEOs, 21% as engineers, and 17% as software engineers.
Most of these jobs were in areas of leadership or technological proficiency.
#startupsā¦ x.com/i/web/status/1ā¦
ā Ilya Strebulaev (@IlyaStrebulaev)
2:13 PM ā¢ Sep 20, 2024
š”Takeaways for You:
āØ Donāt chase the shiny objectājust because something is trending doesnāt mean itās a good investment.
š Think long-termālook for founders with vision and drive, not just an exciting product.
š¤š» Bet on the teamāthe right team can pivot, adapt, and turn a good idea into a massive success.
Whether you're a pro or just getting started, these principles are a great reminder that there's more to startup success than meets the eye. Letās start looking at the bigger pictureāone where people, vision, and execution matter more than just a flashy pitch.š
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It has been a pleasure! I will see you next week. Until then, Stay motivated! Stay strong! Cheers!
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