I am thrilled to announce the formation of Palo Alto Venture Science – a venture capital firm located in the heart of silicon valley that aims to be one of the key components of the silicon valley ecosystem the way venture capital firms once used to be.
I’ve started companies and invested in them over the last 5 years at various capacities. I watched silicon valley create tremendous value for the world, make it a better place to live and in the process create wealth for the people who participated in this process. Venture Capital, I noticed, is what fuels this economic activity. But I also noticed, over time, venture capital firms and venture capitalists started getting a bad “rep”. Go to any hackathon and engineers throw bitter jokes about VC’s. Go to any private equity conference and the institutional investors complain about subpar VC returns over the last 10 years. But without venture capital, Apple, Google, eBay, Yahoo, you name it, wouldn’t be here. So was something broken or about to be broken? The answer is yes, and our team wants to unbreak it. We will do this by incorporating 3 principles – all starting with R’s – so let me call them the three R’s of venture capital.
R1 – Redefine VC investing methodology
Venture capital firms invest in all sorts of companies using lots of approaches. We noticed that VC investing suffers from
a. Cognitive biases and hype investing – They chase hot companies and hot markets and by the time one thinks anything is hot, it is too late
b. Partners in VC’s invest in various ways mostly to benefit themselves, not the entrepreneurs, not the LP’s.
So when we invest, we do it through the data driven analytical models we created (and since we worked hard to build these models, we patented them too!)
R2 – Refocus on partnerships
a. We will only invest in entrepreneur friendly formats. Whether it’s a note or a price round, we will always structure the deal to maximize the cofounders’ ownership while maintaining a balanced equity split
b. Our venture capital partnership will be fair, balanced and transparent with our investors in that we will distribute their investments back to them first before we take a share of the profits
R3 – Reinforce best practices
We will only work with the best third part firms such as law firms and banks.
So for us,
f(vc) = R1 + R2 + R3 + personal commitment
Because no matter how much math you do, it won’t work unless you’re personally committed. And as a team we are.
PAVS is in its early stages. We will soon announce our team, partners, portfolio companies and more. For now, feel free to reach out to us if you want to comment on what I wrote here. Or feel free to ask for a time to grab coffee in downtown Palo Alto, we will always be accessible.