Robin reflects on the nature and mission of venture capital. VC means continually finding underserved needs, looking at larger markets, and using first principles to see beneath the surface and identify more disruptive opportunities. Capital accelerates and catalyzes the development of an industry. Early-stage investing requires working at the frontiers of technology, markets, and business. Practitioners need to stay young at heart, keep an open mind, continue learning, and exchange ideas with younger people. Robin sees VC as a force that helps capable entrepreneurs realize their dreams faster. Beyond financial returns, it should carry a sense of mission: helping bring about change in the world is valuable in terms of both social impact and influence.
Key points
The essence of VC: finding underserved needs and potential opportunities.
The approach: first principles, looking beneath the surface, and seeking disruptive opportunities.
What practitioners need: a youthful mindset, openness to learning, and a willingness to work at the frontier.
A sense of mission: helping change the world, beyond financial returns.
The preface to Blitzscaling quotes the famous scene from Glengarry Glen Ross: first prize is a Cadillac, second prize is a set of steak knives, and third prize is getting fired. In social networking, Facebook takes first prize; MySpace may have taken second, but that no longer matters; Friendster takes third—does anyone still remember Friendster? In the internet age, you have to win first prize to survive. Robin’s interpretation is that network effects leave no room for perfect competition or oligopoly, only monopoly: in social networking and search, the leader is far ahead. Competition is brutal and the rewards are enormous, which makes blitzscaling essential. If you move at a leisurely pace and are still not number one when time runs out, there is little left for you.
Key points
In the internet age, first prize is the only prize that matters.
With network effects, there is only monopoly, not oligopoly or perfect competition.
Blitzscaling means taking first place before time runs out; otherwise, you are out of the game.
The pressure investors apply follows the same logic.
Book excerpt (Wan Weigang’s Elite Daily Lessons, relaying Morgan Housel)
Reading guide
Wan Weigang’s Elite Daily Lessons relays Morgan Housel’s model of bubbles: bubbles are not a moral issue; they arise when players with different time horizons are playing different games. First, a company delivers real results and attracts attention. Second, short-term players enter and push up the price. Third, long-term investors mistake short-term price movements for information the market is giving them. Fourth, short-term money leaves and the price collapses. The point is not to decide whether the market is right or wrong, but to know your own strategy and time horizon, and who the other participants are. This model is a tool for understanding, not a tool for timing the market.
Key points
The four stages of a bubble: real results → short-term players enter → long-term players are misled → the bubble bursts.
Long-term and short-term players are playing different games.
Knowing who you are and who the others are matters more than predicting the market.
The model is a tool for understanding, not for market timing.
Robin’s commentary (a July 2020 retrospective; see the verification note for the bond figures)
Reading guide
In July 2020, Robin looked back at Tesla’s financial turning point and considered whether a company solves problems and creates irreplaceable value. The original post explicitly described the amount and conversion price of the 2019 convertible bonds as a hazy recollection. Tesla’s Q1 2019 documents record a $920 million convertible-bond repayment, while its May 2019 pricing document gives an initial conversion price of approximately $309.83 per share, rather than the roughly $250 recalled in the post. The statements about Model 3, cash flow, and the share price in 2020 remain a retrospective from that time; this round of review did not reconstruct the complete timeline. Share prices use the basis applicable before the stock split and should not be compared directly with later prices.
Key points
The Q1 2019 convertible-bond repayment was $920 million; the original post’s roughly $1 billion was an approximation.
The May 2019 convertible bonds had an initial conversion price of approximately $309.83, rather than the $250 hazily recalled in the original post.
The statements about Model 3, cash flow, and the share price are a retrospective in the original 2020 post; the complete timeline was not reconstructed in this review.
Robin’s central question: Does the company solve problems and create irreplaceable value?
Reprinted compilation (the original post names Dedao / Wu Jun’s Letters from Silicon Valley; the exact installment remains to be confirmed)
Reading guide
The original post names Dedao / Wu Jun’s Letters from Silicon Valley and compares the investment approaches of Sequoia, KPCB, and YC. Some material about Sequoia’s three stages, explaining a business on the back of a business card, and a company’s DNA can be matched to the venture-capital chapter of Wu Jun’s 2008 Langchao Zhidian, but this does not establish the source of the entire post or confirm its other details. The accounts of KPCB’s investment outcomes and involvement with companies are relayed from the original post; they have not been verified by this site and do not describe current policy. YC emphasizes founders’ potential and mentors’ experience. Paul Graham’s own biography also names Jessica Livingston, Robert Morris, and Trevor Blackwell as cofounders.
Key points
The discussion of Sequoia’s three stages, technological leaps, and the back-of-a-business-card test can be partly matched to Wu Jun’s 2008 article.
The principles attributed to Bill Coughran are relayed from the original post; their complete source remains unconfirmed.
The historical accounts of KPCB’s investment outcomes and involvement should not be treated as the firm’s current policies.
YC was cofounded by Paul Graham, Jessica Livingston, Robert Morris, and Trevor Blackwell.
Robin discusses venture capital’s time horizon. A VC fund commonly lasts around 10 years, or as little as five to seven. Compared with mutual funds in the secondary market, VC is still a medium- to long-term investor: it must consider changes in trends in years and need not worry about daily fluctuations. Within the protection and constraints of a fund’s term, investments with a five- to ten-year horizon are most suitable. VC practitioners must sense which trends will unfold over those years and which are merely brilliant but short-lived fireworks. A 15- to 20-year outlook, however, extends beyond the fund’s life. Even if an investor correctly identifies an industry trend 20 years ahead, being forced to wind up the fund after 10 years may mean falling short halfway and paving the way for later investors. The lesson: understand your industry’s conditions and apply your strengths within them. Neither short-term nor ultra-long-term thinking fits VC.
Key points
VC funds commonly last around 10 years, or five to seven at the short end: they invest over the medium to long term and think in years.
A five- to ten-year horizon is most suitable; too short may be mere fireworks, while too long risks falling short halfway.
A fund must reduce its capital and wind up when its term ends: ultra-long-term thinking does not fit VC.
Understand the conditions you work within and apply your strengths accordingly.
Robin’s commentary (following an industry commentary article)
Reading guide
Venture investing has two kinds of mistakes: backing the wrong venture and losing the principal, or missing a venture and forgoing substantial upside. Ordinary VCs worry about backing the wrong companies; top VCs worry more about missing them. If just one company in a portfolio delivers a 100-fold or 1,000-fold return, the others can fail without ruining the outcome, greatly increasing tolerance for failure. By contrast, a creditor-like focus on protecting principal leads only to low returns and does little to encourage innovation. For Robin, the challenge and appeal of the industry lie in continually learning, accepting new challenges, and refining investment logic through both bad investments and missed opportunities. He urges Taiwan’s VC industry to be more ambitious: an internal rate of return of 15–20% is good, but higher targets can inject fresh momentum for innovation and progress into Taiwan.
Key points
There are two investment mistakes: backing the wrong company and missing the right one. Top VCs worry more about missing opportunities.
The logic of outsized returns: one 100-fold or 1,000-fold investment can offset the failures of the others.
A creditor-like mindset leads only to low returns and stifles innovation.
Robin’s hope for Taiwan’s VC industry: raise its ambitions and help drive industrial innovation.
Reprint (Buffett shareholder-meeting Q&A, with a source link)
Reading guide
In a shareholder-meeting Q&A, Buffett and Munger explain how they examine a business: look for a broad, enduring moat protecting a substantial economic castle, with an honest lord in charge. Under capitalism, however, every moat will come under attack, and most prove worthless. The task is to understand why certain castles have survived and what could destroy them in five, 10, or 20 years. Munger translates the honest lord into economic terms: low agency costs plus advantages of scale. They also distinguish businesses where you need to be smart only once, such as cable networks in an earlier era, from businesses where you must stay smart, such as retail, where the castle needs defending every day. In valuation, the moat and management inform an assessment of the certainty of future cash flows. No formula can tell you precisely that a moat is 28 feet wide and 16 feet deep; you have to understand the business. Berkshire’s good performance has come not from doing many brilliant things, but perhaps from doing fewer foolish things than most people.
Key points
A moat, an economic castle, and an honest lord: three elements for examining a business.
Every moat will be attacked, and most are worthless.
Distinguish businesses where you need to be smart once from those where you must remain smart.
Valuation is an art: the moat informs an assessment of the certainty of future cash flows.
A company so good that a fool can run it will eventually be run by one.
Robin’s commentary + a framework from another source (Lao Qi’s Reading Circle)
Reading guide
A framework from another source lists what investors look at in a venture: integrity, profitability, customer acquisition, key metrics, the team, runway, barriers to entry, market potential, and the competitive landscape. Robin adds his own comments: partnerships should benefit both sides, the business must be able to make money amid competition, and founders need to know their key numbers. At the end, he challenges the claim that the venture itself is unimportant, reaffirming the importance of the market and validation. Note that points such as a 12- to 24-month runway and refusing to invest without patents reflect particular investors’ preferences, rather than universal requirements.
Key points
The investor checklist: integrity, profitability, customer acquisition, metrics, the team, runway, barriers to entry, market potential, and competition.
Robin: build a partnership that benefits both sides, and know your key numbers.
The venture matters, as do the market and validation.
The checklist describes investor preferences, not universal rules.
Robin’s commentary + a framework from another source (Lao Qi’s Reading Circle)
Reading guide
Material from another source discusses support from angel investors, fundraising windows, and equity and exit arrangements. Robin adds two comments: trust is the foundation, and valuations should be reasonable. Raise somewhat more than you need according to the circumstances, rather than relentlessly seeking the highest valuation and the largest amount of capital. The examples in the source—raising 1.5 to two times the calculated amount, a 5:3:2 ownership split, and four-year vesting—illustrate particular scenarios, not universal rules. Equity, exit, and profit-distribution arrangements still call for expert advice.
Key points
A reasonable valuation matters more than a high one.
Raise somewhat more than you need according to the circumstances; more is not always better.
Trust is the foundation of the relationship with an angel investor.
The numerical examples are not universal rules. Consult experts on equity arrangements.
Robin’s commentary + material relayed from another source
Reading guide
Material from another source uses boxing and herd behavior in investing to discuss controlling default responses. Instinctive reactions are often wrong in investing, and markets are most dangerous at their most euphoric. In the final section, Robin connects the argument to entrepreneurship: building a business requires differentiation and a deeper understanding of fundamentals, rather than following the crowd. When everyone runs in the same direction, that is a reason to stop and think clearly about what you are doing. Going against instinct does not guarantee profits; it helps avoid responding passively.
Key points
Instinctive reactions are often wrong in investing.
Herd behavior fuels bubbles.
Robin: entrepreneurship requires differentiation and understanding fundamentals, rather than following the crowd.
Going against instinct is not a guarantee of profit; it is a way to avoid passivity.
Following a discussion of four investment principles, this piece explains venture capital’s power law: a small number of investments drive the returns of an entire fund. A story about YC’s top two companies illustrates the risk of missing exceptional businesses and the challenge of recognizing unconventional founders. Note that “better to back a hundred wrong companies” is rhetoric, not advice to make unlimited bets. No underlying data is provided for the returns of YC’s 200 companies, and the possibility of survivorship bias must be kept in mind.
Key points
The power law: a small number of investments drive a fund’s returns.
Missing an exceptional company is more costly than backing the wrong one.
Recognizing unconventional founders.
“Better to back a hundred wrong companies” is rhetoric, not betting advice.
Robin’s personal account + material from another source
Reading guide
Material from another source discusses developing interests and patience over time. Robin recounts 14 years in underwriting and investing, involving 25 transactions. He describes himself as conservative, with returns that are not particularly outstanding, but says his lasting motivation comes from helping small companies grow and a sense of mission to help Taiwan’s industries move up the value chain. The years and transaction count are his own account from 2021 and have not been independently verified; his self-assessment is not an external performance rating.
Key points
Interest and patience can be developed over time.
Robin’s own account: 14 years and 25 transactions in underwriting and investing.
The motivation comes from helping others build businesses and helping Taiwan move up the value chain.
Self-described as conservative, and driven by a sense of mission.
Robin’s commentary + material paraphrased from a foreign-language source
Reading guide
The foreign-language material argues that early-stage founders should not sacrifice funding opportunities or good investors over a small difference in valuation. An excessively high valuation can become a constraint and add pressure in the next round. Robin adds that the goal is to find long-term partners, not someone to take an investment off your hands. The amounts and ownership percentages are hypothetical examples, not advice on an actual transaction. The highest bidder is not necessarily the worst investor, nor is the public-market price an absolute benchmark; dilution and other terms still need to be assessed case by case.
Key points
Do not lose a good investor over a small difference in valuation.
An excessively high valuation can constrain the next round.
Look for long-term partners, not someone to take the investment off your hands.
A numbered digest of Wu Jun’s course material: John Doerr’s stealth-phase approach and independent perspective; the high margins and risks in the SGI case; and the value of a repeatable investment method and a network of companies that help one another. Performance figures have been left out of this guide, while the framework of looking at how the world may change is retained. The source’s numbering skips item 4 and is preserved. Details such as high margins being the sole cause of bankruptcy and the proportion of companies acquired by other portfolio companies have not been independently verified.
Key points
The stealth phase: develop quietly and maintain an independent perspective.
High gross margins do not mean an absence of risk.
A repeatable investment methodology.
The long-term value of a network of companies that support one another.
A compilation of three levels of business assessment. First, demand combined with scarcity allows a company to charge and make a profit. Second, technology changes what is scarce, so sustaining profits requires a moat. Third, scalability and pricing power determine whether returns can grow. Cautions: investors’ requirements vary; disruption does not erase all value overnight; controlling scarce resources also requires a workable cost structure and customers able to pay. Monopoly is not a prerequisite for growth, and any such position must comply with the law.
Key points
Demand + scarcity = the ability to charge.
Technology changes scarcity; sustaining profits requires a moat.
Scalability and pricing power determine the ceiling on returns.
The cash pressure of unit economics: customer acquisition cost (CAC) is paid up front, while customer lifetime value (LTV) takes years to realize. After finally reaching positive cash flow and profitability, founders face another decision: raise more money and increase spending again. Both founders and investors struggle with this choice; it takes foresight, patience, and resources. Caution: the original’s description of the CAC–LTV relationship raises questions about both direction and definitions. It is retained as written, has not been independently verified, and must not be used as a quantitative model. Reinvestment is not mandatory; it depends on resources and whether the expected returns can be validated.
Key points
CAC is paid up front, LTV realized later: the cash-flow timing gap.
The difficult choice of expanding again after reaching positive cash flow.
Foresight, patience, and resources are needed.
The original formula is questionable; do not use it as a model.
An examination of VC behavior through the influence people have on one another in finance: the industry has moved from an era of lone wolves to an era of the herd, with rotating hot sectors and increasingly similar investments. The argument favors independent judgment and perspectives from other disciplines as ways to look beyond consensus. Cautions: the “era of the herd” is an observation, not a statistical finding. Disagreeing with consensus does not make you right, and a cross-disciplinary perspective cannot replace professional due diligence. Independent thinking does not rule out exchanging ideas.
Key points
An industry observation: VC’s shift from lone wolves to the herd.
Rotating hot sectors can produce increasingly similar investments.
Independent judgment and cross-disciplinary perspectives help look beyond consensus.
A cross-disciplinary approach cannot replace professional due diligence.
Robin offers four points on long-term investing, then adds that wealthy people could consider a small allocation—say, 3%—to frontier investments such as venture capital, preferably with managers who have navigated cycles over several decades. A VC fund’s ten-year term, he suggests, forces investors to stay the course. Cautions: 3% is a hypothetical example, not Robin’s own allocation or a recommendation for yours. Not all funds have ten-year terms, and past experience does not guarantee an ability to identify the future.
Key points
Four principles for long-term investing.
A hypothetical small allocation, such as 3%, to frontier investments.
Preferably, managers should have navigated cycles over several decades.
A ten-year VC fund term forces investors to stay the course.
Robin’s own quoted observation + book excerpt (Surviving a Startup)
Reading guide
Robin’s observation: extraordinary returns come from the exponential growth that a company’s changes create. An excerpt from Surviving a Startup distinguishes two kinds of risk: risk in established fields can be controlled, while risk in new fields is unavoidable. It includes the Nike founder’s cash-flow bets and Robin’s self-deprecating suggestion that one might be better off remaining an employee. Cautions: the claim that a bigger leap in innovation increases the probability of a greater return has not been independently verified; taking more risk is not necessarily better. The account of Nike winning every time carries survivorship bias and is not a basis for advocating an all-in bet.
Key points
Extraordinary returns come from the exponential growth created by change.
Risk in established fields can be controlled; risk in new fields is unavoidable.
Stories of successful bets are subject to survivorship bias.
Three bootstrapping cases from Surviving a Startup, all starting with a real problem faced by the founders or their customers: Mailchimp, which reached $700 million in revenue and was later acquired by Intuit for more than $10 billion; Shopify; and Shutterstock. Companies can grow large without venture capital, but the figures, including market capitalizations and acquisition amounts, refer to the time of the original text. A founder’s own need is a starting point, not sufficient proof of a market.
Key points
Bootstrapped companies can also become large businesses.
Start with a real problem faced by you or your customers.
Intuit acquired Mailchimp for more than $10 billion, as reported at the time.
Your own need is a starting point, not proof of a market.
Book excerpt (the Unicorn Hunters series from Surviving a Startup)
Reading guide
The Unicorn Hunters series from Surviving a Startup looks at investing in teams. Smart investors bet on a team, not a particular idea or business. Startups are works in progress: even if their initial idea is wrong, a winning team will change direction and keep iterating until it finds a way forward. The CEO is the most important person on the team, yet investors’ most popular screening criteria can be traps. Elite universities select for test scores and extracurricular activities, not leadership. That mindset filters out rebels, free spirits, and late bloomers—neither Jack Ma nor Steve Jobs attended a top university. Senior VPs at major companies are often excellent executors, not natural risk-takers. Real due diligence goes beneath the résumé: how did the founder persuade cofounders to give up six-figure salaries for equity, what obstacles arose while advancing ideas, and what did they learn from failure? Outstanding leaders act like magnets, drawing people willing to take enormous, even irrational, risks to follow them. Almost nobody builds a unicorn alone; the CEO is the catalyst who gets everyone moving.
Key points
Bet on the team, not the idea: a winning team keeps iterating until it finds a way forward.
Elite universities and big-company credentials are the most popular screening traps.
Look beneath the résumé: decisions made, obstacles overcome, and lessons from failure.
Leadership is a magnet: it persuades talent to give up high salaries for equity.
Book excerpt (the Unicorn Hunters series from Surviving a Startup)
Reading guide
The Unicorn Hunters series from Surviving a Startup turns from the team to the market. A large market provides room for growth, exits, and follow-on funding. A company can start in a small niche, but it needs a path to expansion: a local bakery and a bakery chain are different businesses. VC needs large exits, not a tenfold return in a small market; if your market is inherently small, do not rely on VC. Note the book’s qualification: starting small is fine if the company can expand. Claims such as “smart angels do not invest in companies without follow-on funding” are too categorical. Fund sizes and strategies vary, and small businesses are not without value.
Key points
Large markets provide room for growth, exits, and follow-on funding.
Starting in a small niche is fine, but there must be a path to expansion.
VC wants large exits, not tenfold returns in a small market.
Small-market businesses should not depend on VC, but their value is not zero.
Book excerpt (the Unicorn Hunters series from Surviving a Startup)
Reading guide
The Unicorn Hunters series from Surviving a Startup examines market leadership: VCs look for a company's potential to lead its market, and price itself is an attribute of quality. Network effects, scale, and category recognition create real barriers to entry. Snap's move into mobile and teenage users, avoiding a head-on battle with Facebook, and Apple's transformation from a computer company illustrate category leadership. The author's call to give up unless you can be number one needs qualification: it applies where network effects and scale effects are pronounced, rather than serving as a creed for every business.
Key points
The potential to lead a market is a core VC criterion.
Network effects, scale, and category recognition create barriers to entry.
Snap entered from the side rather than confronting Facebook head-on.
The strong claim to give up unless you can be number one applies only under certain conditions.
Book excerpt (Xuan Tian's Finance and Innovation: A New Framework)
Reading guide
This excerpt from Xuan Tian's Finance and Innovation: A New Framework examines the kind of capital that supports innovation. VC supports innovation through active governance, knowledge networks, and funding. It tolerates short-term failure and offers substantial rewards for long-term success—precisely the incentive structure innovation needs. A fund's own fundraising structure and liquidity constraints affect its investment behavior: research finds that young firms become more tolerant of failure after successfully raising a new fund. Career concerns can work in either direction, making young managers more conservative or more aggressive; researchers have not reached a consensus. The dates and methods of the studies cited in the book have not been individually verified.
Key points
VC provides more than money: active governance, knowledge networks, and funding.
Incentives should tolerate short-term failure and reward long-term success.
A fund's fundraising and liquidity structure constrain its investment behavior.
Career concerns can affect risk appetite in either direction; the question remains unsettled.
In Jason Fried's fictional press release, Basecamp announces that it will stop generating revenue, pursue a higher valuation, and raise an imaginary dollar. A fictitious professor proclaims a $100 billion valuation and uses an absurd social-media-and-burn-rate formula to project 12 billion users by 2016. The piece satirizes valuations built on imagined traffic rather than business results. Its fictional framework must remain clear: Basecamp did not actually stop collecting revenue, raise one dollar, or receive a $100 billion valuation. The formula is not a valuation tool.
Key points
A fictional press release announces an end to revenue generation and a $100 billion valuation.
The piece satirizes valuations based on imagined traffic.
The fictional framework must not be taken literally.
This excerpt from Dedao's book-listening service discusses early customer acquisition: the four-step approach to entrepreneurship emphasizes targeted discovery rather than casting a wide net. Customers fall into five levels of urgency. Those at level four, already cobbling together their own solutions, and level five, already intending to pay, are your earlyvangelists. To cross the chasm into the mainstream, an existing market calls for clear differentiation in positioning; a new market calls for a complete solution for a niche or a tipping point driven by key people. These customers are not angel investors. A small early customer base permits deep validation, but does not eliminate the need for research.
Key points
Targeted discovery of early users beats casting a wide net.
Customers at urgency levels four and five are earlyvangelists.
Cross the chasm through differentiation in existing markets or complete niche solutions in new markets.
Small numbers allow deep validation, not the abandonment of research.
36Kr reported that Sequoia Capital restructured its US and European businesses on October 26, 2021. It established the permanent, open-ended Sequoia Fund as a parent fund; public-market holdings would return to it rather than face mandatory distribution. Sub-funds would remain closed-end, with investment returns throughout their life cycles flowing back to the parent. LPs could redeem annually, fee and carry arrangements would change, and employees could invest. Long-term ownership addresses the forced exits associated with traditional ten-year funds, allowing Sequoia to keep holdings that continue growing after an IPO. LP acceptance and the risk of concentrated redemptions test the structure, in contrast with traditional approaches such as Benchmark's. Fees, carry percentages, and fund sizes are those reported at the time, not today's terms.
Key points
The structure combines a permanent parent fund with closed-end sub-funds.
Public-market holdings return to the parent rather than facing mandatory distribution.
Annual redemptions introduce the risk of a run.
The model addresses forced exits under traditional ten-year funds.
This excerpt from Touzi Yilei discusses angel investing. The earliest opportunities may have no team or company, only an idea; the basis for a decision is the person. Knowing the founder deeply matters more than files, and a spouse, relatives, friends, or colleagues can provide useful perspectives. The book also contrasts stages: angels focus on the right tail of returns, while consensus among seasoned investment-committee members often produces mediocre choices. VC and PE rely more on data and success rates. Claims that a spouse is the only person to ask or that valuation is impossible are strong rhetoric. Returns of thousands or tens of thousands of times are exceptional possibilities, not typical outcomes; basic legal and accounting checks remain necessary.
Key points
At the earliest stage, the investment is in the person.
Deep familiarity matters more than files.
Angels focus on right-tail returns; consensus often produces mediocre choices.
Returns of thousands or tens of thousands of times are exceptional, not typical.
Robin offers five observations on institutional investors' time pressure. First, funds must dispose of holdings at maturity, so investors need growth to generate high returns quickly; founders may feel time differently. Second, institutional investors and unicorn startups generally want more than linear growth. Without exponential growth within a certain period, unicorn status is unlikely and returns may be limited. Third, do not rush to institutional investors while still refining the product or seeking product-market fit (PMF): they will often demand exponential growth and greater market spending instead. Fourth, time pressure is not necessarily bad. If you are building the next big thing, the opportunity window may be short, and investor capital can help establish your position before giants enter. Fifth, corporate venture capital (CVC) and evergreen funds have their own financial pressures. As the fourth point suggests, a time-constrained VC may actually be the better choice.
Key points
Fund maturity and required disposals create time pressure for investors.
Exponential versus linear growth matters for becoming a unicorn.
Do not rush to institutional investors while still seeking PMF.
Time pressure is not necessarily bad: the window of opportunity may be short.
CVC and evergreen funds have their own financial pressures.
Robin's late-2022 view of startup fundraising over the next one to two years: pandemic-driven remote demand and quantitative easing fueled capital markets and startup investment in 2020–2021. In 2022, the continuing Russia–Ukraine war, inflation following a decade of easy money, tightening and rate hikes in Europe and the United States, and spending shifting from electronics to offline activities battered technology stocks. Meta and Netflix fell over 70%; AMD, NVIDIA, and Intel over 60%; Zoom and C3.ai as much as 90%. Sequoia and Y Combinator warned of a funding winter. Startups must return to fundamentals: will customers pay for the product or service, rather than merely hoping VCs will? The era of burning cash for market share has passed. Be more focused and lean, and right-size the organization if necessary to weather the next one to two years. VCs assess investments over five to seven years, rather than being entirely driven by two to three years of volatility, but large portfolio write-downs create operating pressure and may require valuation adjustments. Stock declines are figures from 2022.
Key points
The shift from pandemic boom to funding winter reflects the 2022 context.
Customers must pay, rather than VCs alone.
The era of burning cash for market share has passed.
Be more focused and lean; reduce organizational size if necessary.
VCs look five to seven years ahead but may adjust valuations with the market.
Robin's commentary plus a reprint (translated and edited by 36Kr's Shenyiju)
Reading guide
Robin opens with his view that the hottest investment area of 2022 has returned to AI, especially the widely discussed topic of AI generation: the future is here. The reprinted 36Kr Shenyiju report describes a San Francisco generative-AI gathering organized by Conviction founder Sarah Guo, bringing together engineers, entrepreneurs, and financiers, including Hugging Face's CEO. Stability AI announced $101 million in funding at a $1 billion valuation; Jasper raised $125 million at a $1.5 billion valuation. Microsoft's Copilot and OpenAI's GPT-3 and DALL-E 2 fueled the excitement, with even Sergey Brin appearing at a related gathering. Investor Nathan Benaich observed considerable FOMO. Legal questions were emerging too: the boundaries of fair use for training models on copyrighted data were expected to be tested in court. Valuations and funding amounts are figures from 2022.
Key points
Robin: AI is again the hottest investment area of 2022; the future is here.
Stability AI's $1 billion and Jasper's $1.5 billion valuations are 2022 figures.
FOMO is evident: Silicon Valley hype can run ahead of reality.
Copyright, safety, and regulation remain unresolved issues for generative AI.
Robin opens with points he has often made: practice continually, raise money while you still have money, and approach your most desired VCs later. The excerpt from Build explains how to get noticed through a compelling story and an understanding of your audience. Most Silicon Valley VCs are not technical, so focus less on technology and more on why. A 15-slide pitch must appeal to reason and emotion; that art takes practice. Do not begin with top-tier VCs, who share information. Start with friendly investors who will give feedback. Allow three to five months for fundraising, begin before you need money, and avoid desperate financing when cash runs out. Remember vacations in August, Lunar New Year, and Thanksgiving through New Year. The checklist: no games; listen to feedback while holding to your vision; specify the amount, use of funds, and milestones; link valuation to milestones; build a data room; confront risks; seek two equally influential investors to balance each other; and, as in chess, think two moves ahead.
Key points
Raise money while you still have money.
Practice with friendly VCs first; approach top-tier VCs later.
Allow three to five months and account for investor holidays.
Tie valuation to milestones and treat each investment independently.
Robin opens by urging founders to think things through and prepare before fundraising. From Series A onward, VC capital demands rapid scaling and exponential growth, not leisurely product refinement and product-market-fit validation. VC has a sense of urgency. Ideally, everything is ready and only the east wind is missing; money is that wind. If nothing else is ready, do not rush to summon it—it could blow you over. The excerpt from Build asks what the money is for and the minimum needed. Your business may not suit VC. Large VCs are surprisingly risk-averse, scrutinize growth, signups, and cancellations, and answer to LPs. Alternatives include niche or regional VCs, angels, and corporate investment arms. A deal is about the person in the room who will become your director. Once you accept the money, you are tied to that investor: VCs can combine to fire founders, but founders cannot fire investors. Ask founders who have weathered difficult times with the partner what they are really like.
Key points
Money is the missing east wind only when everything else is ready.
After Series A, VCs want scaling, not slow PMF validation.
Your company may not be suited to venture capital.
Investors can combine to fire founders; the reverse does not apply.
Ask founders who have faced hardship with a partner about that partner.
Book excerpt (The Power Law) plus two passages of Robin's commentary
Reading guide
This excerpt from the Chinese edition of The Power Law, translated by Professor Xuan Tian, describes VC as a bridge between dreams and reality, once called humanity's last hope by The Wall Street Journal. VCs find promising seeds among imaginative ideas, nurture them, and eventually hand them to more suitable owners before stepping back. The industry's pioneers, uncertainty, decline, and renewal intertwine with new challengers. Yet hidden corners remain: growth-driven governance failures and scandals at Uber, WeWork, Theranos, and FTX warn that our understanding is incomplete. Robin adds two comments. Taiwan's VC engine has stalled somewhat, but he is confident it can restart and accelerate to make up for more than a decade of stagnation. VC carries dreams: its few celebrated successes imply many failures, yet losses must not extinguish confidence or hope. Bruised investors carry on, learning from bad investments and missed opportunities. He closes by adapting a line from The Three-Body Problem, described as essential reading in China's VC community: “We will give civilization to time, rather than time to civilization.”
Key points
VC bridges dreams and reality.
Growth-first governance failures are illustrated by Uber, WeWork, Theranos, and FTX.
Robin believes Taiwan's stalled VC engine can restart.
Investment losses should not extinguish hope; wrong bets and missed opportunities build judgment.
“Give civilization to time, rather than time to civilization.”
Book excerpt (The Power Law) plus six observations by Robin
Reading guide
An excerpt from The Power Law recounts Masayoshi Son's 2017 visit to WeWork. Arriving an hour and a half late, he offered only 12 minutes. After a tour, he invited Adam Neumann into his car. Their 28-minute interaction produced a proposed $4.4 billion SoftBank investment at a $20 billion valuation—more than fellow shareholder Benchmark Capital had raised in its entire 22-year history. Son's capital encouraged Neumann's hubris and global expansion, but also opened an exit window: T. Rowe Price sold as much as it could, while Benchmark sold about 20% of its holding and locked in a 15-fold return on its original investment. Robin adds six observations: Neumann's reality distortion field merits watching; after his downfall he soon secured backing from top Silicon Valley VC A16 for a new venture; a pitch's length matters less than winning attention and more time; effortless fundraising can hurt both sides, while constraints stimulate creativity; basic investment principles must be remembered; and the era of cash-fueled expansion may have ended with the Vision Fund's decline.
Key points
Twenty-eight minutes and $4.4 billion illustrate an extreme reality distortion field.
Large amounts of capital can change founders' behavior.
Early investors gained an exit window; Benchmark locked in a 15-fold return.
Fundraising that comes too easily can harm both sides.
Resource constraints can sometimes unlock the greatest creativity.
Robin opens with the image of chained ships at the Battle of Red Cliffs: when one catches fire, the flames quickly spread across the fleet. Banks holding or issuing AT1 bonds immediately plunged. The reprinted Bloomberg Q&A describes roughly CHF 16 billion ($17.3 billion) of Credit Suisse AT1 bonds becoming worthless. Contingent convertible bonds, or CoCos, emerged after the European debt crisis as banks' lowest-ranking debt: high-yielding in good times but first in the path of a banking “tsunami.” As UBS acquired Credit Suisse in a government-brokered deal, FINMA said extraordinary state support would trigger a complete AT1 write-down. Investors were furious because shareholders ordinarily absorb losses first, yet Credit Suisse shareholders would receive CHF 3 billion while AT1 holders were wiped out. The departure from capital-structure seniority conventions dealt a blow to the $275 billion AT1 market, where average prices were just 82% of face value, among the deepest discounts on record. This is the context of the March 2023 Credit Suisse event.
Key points
Robin compares financial markets to the chained ships at Red Cliffs.
CoCos offer high yields but stand directly in a financial tsunami's path.
CHF 16 billion of AT1 was fully written down while shareholders received CHF 3 billion.
A departure from seniority conventions shook the AT1 market.
The discussion reflects the Credit Suisse event in March 2023.
These notes argue that VCs should invest in the next big thing and next-generation products. Investing ahead of the curve creates a chance for monopoly, high market share, and uniqueness; a business generating current profits and regular dividends does not fit the VC mindset as well. Consumer businesses often have simpler models, can reach profitability quickly, and have near-zero marginal costs for advertising. B2B involves sales, presales, after-sales support, consulting, and implementation; each dollar of revenue carries meaningful marginal costs, and low initial gross margins are difficult to improve. Investors should examine net dollar retention (NDR) and customer acquisition costs. SaaS margins of 70–80% are presented as evidence of switching costs and uniqueness; customized-service businesses earn 20–30% because customers will switch if margins go higher. The notes cite Buffett's three elements—a good business, a good team, and a good price—with the business first. Robin concludes: invest in the future, monitor NDR, acquisition costs and lifetime value, and seek product businesses with high margins, reflecting competitiveness and switching costs.
Key points
Invest in the next big thing, not just current dividend-paying businesses.
For B2B, examine NDR, customer acquisition costs, and other business metrics.
Gross margin is presented as reflecting customer switching costs.
Buffett's three elements are a good business, a good team, and a good price.
Robin's conclusions: invest in the future, watch metrics, and favor high-margin product businesses.
Robin proposes a hypothetical: you are a retired corporate executive who worked for 40 years and saved 100 million dollars, then became a startup adviser and angel investor. A sincere founding team puts in 1 million, while an angel club contributes 10 million. Each side holds 50% and receives 100,000 shares. Angels pay a premium nine times the team's cost, at 100 dollars per share. The same 100 dollars could buy a liquid stock such as 91APP in the secondary market, be sold for emergency cash, and perhaps still deliver a good return multiple over ten years. How would you invest? Robin adds that fundraising should follow a sequence. Do not necessarily raise externally so early; first build the minimum viable product (MVP) and refine it. Seeking a high valuation without results may bring repeated disappointment and complaints about an unfriendly environment. These figures are hypothetical; 91APP is a comparison, not a recommendation or assessment, and this is not investment advice.
Key points
Consider opportunity cost from the angel investing 100 dollars.
Illiquidity and limited exit flexibility are costs of seed investing.
Fundraising needs a sequence; do not raise externally too early.
Build and refine the MVP before discussing valuation.
This book excerpt discusses fundraising practice: planning cash runway, addressing major risks before raising, interpreting investor interest through feedback, building fundraising momentum, and preparing alternatives. Robin's brief recommendation is to consult an experienced investor.
Key points
Address major risks before beginning fundraising.
Use feedback to gauge investor interest.
Build fundraising momentum.
Always have a backup plan.
Robin recommends consulting an experienced investor.
