In the venture world, even giants like FedEx faced years of losses before finding success. Only Angry Birds saved a Finnish startup Rovio Mobile from bankruptcy and catapulted it into the global spotlight. And LinkedIn's founder stumbled through failed ventures before revolutionizing the job market.

The truth is, successful startups didn't achieve greatness overnight — they overcame challenges and setbacks along the way, inspiring countless others. But what about the lesser-known journeys of business angels, syndicates, and VC firms? We're here to tell some of those stories and draw conclusions.

Even a promising market can fail — so let's say it for the millionth time: don't put all your eggs in one basket

Avoiding early-stage startups only to jump the queue later at higher prices is a common pitfall in the world of venture capital. It's not limited to lone angels or fledgling funds — it can happen to seasoned teams, too.

Take the case of Kleiner Perkins, once a titan of Silicon Valley venture capital. From its inception in 1972 to its landmark $11.8 million bet on Google in 1999, Kleiner enjoyed a golden era marked by investments in stars like Electronic Arts, Netscape, Amazon, and Sun Microsystems. Like any venture firm, Kleiner also had its fair share of misses, investing in companies that yielded no revenue. Yet, despite these risks, Kleiner delivered astounding returns: its mid-1990s fund, for example, returned $32 for every $1 invested, according to Fortune.

However, the firm's focus on renewable energy startups came at the expense of overlooking emerging online services. Between 2004 and 2009, Kleiner Perkins allocated $630 million across 54 "clean tech" companies, with 12 of its 22 partners devoting almost all of their time to these green investments. Unfortunately, many of these ventures failed to deliver, while competitors seized opportunities in the rapidly expanding digital economy, backing icons like Twitter and eBay.

A striking example occurred a decade ago when Kleiner Perkins declined investment opportunities in the then-unknown startup Robinhood — and did it twice. By 2017, Robinhood had become a unicorn valued at $1.3 billion, but Kleiner Perkins was no longer invited to be its investor. When the firm eventually joined Robinhood's funding round in 2018, the cost was significantly higher — by then, Robinhood was valued at $5.6 billion. And this is not an isolated case.

Examples of great early-stage investing opportunities Kleiner Perkins missed. (Image: Fortune)

If strongly focused investing is still more your style, then do it with a "high conviction"

In 2018, Ophelia Brown, hailed as "the most ambitious female VC in Europe," founded Blossom Capital. This venture capital firm has successfully raised nearly $1 billion and became Europe's largest Series A investor by 2022. That firm deploys money as the lead investor in Series A rounds for European tech startups while also engaging in seed investments — backing founders who demonstrate clear global ambitions.

Notable among its portfolio companies is Duffel, a travel booking platform that secured follow-on investments from Benchmark and Index Ventures. Another standout is Tines, a cybersecurity automation platform that received follow-on investment from Accel Partners. Perhaps Blossom's luckiest investment was probably fintech giant Checkout.com, valued at $40 billion as of January 2022 and supported by Insight Partners as well.

What sets Blossom Capital apart from other successful firms is its highly focused approach, as highlighted in a TechCrunch interview with Ophelia Brown. The team at Blossom makes just four to five investments annually, supporting approximately 12 companies per fund. This strategy contrasts sharply with the broader industry norm, where typical venture funds might invest in 35 to 40 companies per fund. Yes, this strategy might seem akin to the proverbial "placing all your eggs in one basket," but Brown prefers to characterize it as "high conviction investing."

This approach reflects Blossom's philosophy of being deeply aligned with the founders of each portfolio company. They invest significant time upfront, typically studying startups for about eight months before making investment decisions. Once invested, Blossom remains highly engaged, actively building strong relationships with the founding team, providing strategic guidance, and facilitating networking. 

The founder of unicorn Checkout.com has shared with Sifted that out of all his investors, Brown is the fastest to respond to messages on WhatsApp and provides invaluable support. Duffel's founder communicates with Brown daily — or at least several times a week.

This is what Ophelia's daily life looks like. (Image: The Standard)

Not all founders grant investors such proximity. As Ben Yoskovitz, Founding Partner of Highline Beta, points out, "Some of the founders I’ve invested in are more communicative than others. Some seek out my help many years later, others don't (which is OK; I may have already served my purpose.) But when founders don't respond to emails or don't have the time for a quick check-in — that's definitely disappointing."

Image: Lessons Learned as an Angel Investor by Ben Yoskovitz 

Don't choose between a great founder and a great idea: choose projects that combine both

Chris Sacca, founder of Lowercase Capital and Lowercarbon Capital, is a prominent figure in the tech industry and a highly successful venture capitalist. He was an early supporter of tech giants like Twitter, Uber, Instagram, Kickstarter, Blue Bottle Coffee, and Stripe.

Sacca's investment portfolio spans diverse technologies, but in recent years, he and his wife Crystal have also been notable advocates in the fight against climate change and champions for diversity in the tech and venture capital sectors. Despite facing financial adversity after the dot-com crash, where he found himself $4 million in debt and returning to an office job, Chris has since become a billionaire, with The Wall Street Journal dubbing him "perhaps the most powerful businessman in America."

What's his secret to success? Sacca attributes part of it to choosing projects with experienced teams and a functional product, often with a user base that is already generating revenue.

Image: MoneyMade

However, it's often emphasized that the founder's qualities outweigh the idea itself, which argues for betting on the founder. A more picky investment strategy (as Chris Sacca prefers) increases the risk of missed opportunities — like when Chris didn't see the potential of Snapchat in time, among other opportunities.

From his 2016 interview, here is Chris' recall of this lapse. (Image: Vanity Fair)

And well, of course, there are always more rules 🙃

Image: Chris Sacca's Twitter

Cover image: Unsplash