Evaluating a Startup: How Aydin Senkit Makes Investment Decisions
I had the pleasure of interviewing Aydin Senkut, Founder of Felicis Ventures, at the UPROUND Conference on Sept. 12. In the past five years, 47 Felicis backed start-ups have been acquired by firms such as Google, Facebook, Twitter, Groupon, Microsoft, AT&T, Disney, Ebay, Intuit and others. This is quite an impressive track record.
I asked Aydin what he looks for in startups he invests in. He emphasized the importance of picking the best founders and he said he looks for “product visionaries”: founders who have an acute vision of a product or service that fulfills a very important need. He spoke about the best founders having an “obsession with building something that is really really awesome” and that their vision is “infectious,” inspiring others to join their mission. One interesting tip: He looks for companies that are “10x” in something - 10x cheaper, 10x faster, or 10x easier. He says this is a good indicator for the startup to be successful long-term. He also said that sometimes investors get bogged down in due diligence, but if there is a great founder and an amazing product that customers are saying “wow, I love this, you can’t take this away from me,” those are the most important things to look for.
Aydin went so far to emphasize the importance of investing in the best founders, that he said he tries to invest in the best founders and startups irrespective of stage, location or valuation. This point can be controversial with some seed investors who may turn down deals due to perceiving that valuations are too high. He said most of the 47 exits were not cheap deals; they were expensive deals: “If you pick the best founders, no matter what you do, you are going to do great. Whatever else you do almost doesn’t matter.”
He also spoke about his willingness to work with companies outside of Silicon Valley, both in other cities in the US, (he made a recent investment in Nashville) as well as in other countries including Canada, Brazil, Finland. “Talent and innovation is global, ” he says. Aydin believes in some of these places there is significant talent, but sparse seed capital, which provides interesting opportunities for seed investors willing to venture to other parts of the world.
Aydin ended the chat on a humbling note saying that despite his $3.2B in enterprise value of exits, the companies he has passed on are more than 2x that. He said he continues to learn from his successes and failures. He’s learned that while some founders might come off as extremely tough, difficult or even slightly “crazy,” these could also be the qualities that help them break through walls, and what makes them unique. Instead of getting turned off by them, he has realized that this could be the very demeanor that can make them successful.