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  • RT @LiamKillingstad: If you enjoyed this please consider: 1) giving the first tweet in the thread a RT (below) 2 giving me a follow. I wri… 1 year ago
Follow @Mathis_DHM

Lessons From The Front…

…  musings from a career in entrepreneurship, big business and the Navy.

 

@Mathis_DHM

  • From my colleague Rajesh Aggarwal MD PhD FRCS FACS. "When greater than 50% of the population is deemed to be … twitter.com/i/web/status/1… 1 day ago
  • RT @MyDaughtersArmy: The amazing moment a deaf child or adult truly hears for the first time in their lives. #CochlearImplants https://t.c… 6 months ago
  • Ron Kerbs, one of the most inspirational young leaders I have had the honor to work with. Got to know Ron and his c… twitter.com/i/web/status/1… 7 months ago
  • Proud father moment: Daniel Mathis, on his summer strategy internship. lnkd.in/eVxPq_vK 7 months ago
  • Thanks to my work with the Harvard #InnovationLab and the HBS #RockCenter, and with #ComcastNBCUniversal, I have ha… twitter.com/i/web/status/1… 10 months ago
  • Incredible step forward for the future of healthcare in the home!Bravo Quil team twitter.com/cedwardski/sta… 1 year ago
  • RT @cedwardski: Quil introduces the ‘Quil Assure’ connected home platform to revolutionize the #AgingAtHome experience– for both #seniors a… 1 year ago
  • Kidas raises money from Overwolf to protect young gamers from cyberbullies venturebeat.com/2022/01/25/kid… via @VentureBeat 1 year ago
  • RT @LiamKillingstad: If you enjoyed this please consider: 1) giving the first tweet in the thread a RT (below) 2 giving me a follow. I wri… 1 year ago
Follow @Mathis_DHM

Tag: venture capital investing

Don Mathis on VC Friends and Frenemies

Don Mathis frenemiesFrom time to time I check in on the latest from Harvard Business School Working Knowledge, an extremely insightful blog that features articles, research and commentary from the school’s faculty. If you haven’t yet visited the blog, I strongly recommend doing so. Whether you’re a newly-minted MBA or longtime executive, you can take more than a few worthwhile lessons from its generally fresh approach to market, policy, and management analysis.

Most recently, I read Carmen Nobel’s piece (“In Venture Capital, Birds of a Feather Lose Money Together”) on the disadvantages of friendship in venture capital investing and what can happen when otherwise affine VC investors fail in their joint endeavors. Based on the research and subsequent paper by HBS colleagues Paul Gompers, Yuhai Xuan and Vladimir Mukharlyamov, the article explores the perhaps-unexpected pitfalls of investing with others of similar socioeconomic backgrounds and vocational trajectories, especially when it concerns VCs who have known each other for many years.

To measure the performance of these investors, the team looked at a broad database of 3,510 VCs, along with the 12,000-plus investments conducted by these investors over a 30-year period, defining success by whether or not an investment in a private company led to an IPO down the road. Looking at the employment histories, educational backgrounds, ethnicities, and other fundamental criteria of these investors, the researchers found that success rates dropped by significant numbers when two VCs of similar backgrounds co-invested in companies. If co-investors previously worked at the same company, success rates dropped by 17 percent; alumni from the same undergraduate school, 19 percent; and those of the same ethnic minority, 20 percent.

The thrust of the article, more or less, seems to indicate that investors who bring different perspectives to a private business are more likely to challenge each other on key decisions, particularly in the early stages of the company’s development. Those challenges play crucial roles in everything from strategic management to the selection of board members and executive personnel. Food for thought!

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Posted on August 22, 2014April 14, 2018Categories PostsTags Carmen Nobel, Don Mathis Kinetic Social, friendship, Harvard Business School Working Knowledge, venture capital investingLeave a comment on Don Mathis on VC Friends and Frenemies
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