20VC: Why Spray & Pray Investing Is Wrong, Why Data-Informed VC Beats Data Driven VC & What To Look For When Investing In A Marketplace with Josh Breinlinger, Managing Director @ Jackson Square Ventures
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Episode Highlights
Market Evaluation
Josh Breinlinger shares his preference for a bottoms-up approach when evaluating market sizes, emphasizing its practicality in assessing large markets. He explains that whether using a top-down or bottoms-up method, the sheer size of certain industries, like the $412 billion U.S. pharmacy market, makes the approach less critical.
Whether you do it top down or bottoms up, it's big enough, it just doesn't matter.
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This perspective highlights the importance of focusing on market potential rather than getting bogged down in methodological debates 1.
Investment Rounds
Josh criticizes the evolving complexity in naming investment rounds, arguing that these labels often mislead rather than inform. He notes that founders frequently use round names to present their companies as earlier-stage than they are, which can distort perceptions of value.
A series A could be anything from a 5 million valuation to 100 million valuation. So the name doesn't mean anything.
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Instead, he suggests focusing on the actual amounts raised and current valuations to provide a clearer picture of a company's financial standing 2.
Bridge Rounds
Josh offers a nuanced view on bridge rounds, challenging the notion that they signal failure. He shares experiences from Jackson Square Ventures, where several successful companies, including Docusign, utilized bridge rounds during temporary setbacks.
It's definitely not the case that you're just always throwing good money after bad.
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These insights underscore the potential of bridge rounds to support companies through challenging phases, provided there is confidence in the team's ability and the business model 3.
