Mike Chalfen: How to Build Anti-Fragile Venture Portfolios Today | 20VC #904
4Mike Chalfen is a solo GP with Chalfen Ventures and one of the most respected and successful early-stage investors in Europe over the last two decades. Among Mike’s incredible portfolio includes the likes of King.com (makers of Candy Crush), Houzz, Tipalti, Snyk, and Tray.io, to name a few. Some incredible facts on Mike, he has a 15x career track record, he has a portfolio value of over $40BN+ and he joined the venture industry, the year of my birth!
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00:00 Intro
00:44 How did you get into venture?
04:45 Misalignment with GPs and LPs
06:05 From APEX to Chalfen Ventures
09:58 Why most VCs aren’t good at building firms
11:20 Is the correction as bad as it seems?
13:45 How have prior busts change how you invest
16:52 Do you regret your pace of deployment in ‘21?
18:30 How do you advise new investors seeing this crash?
21:12 Keith Rebois’s acid test
22:45 What problem is Chafren Ventures solving?
26:23 Diversification in your portfolio
29:02 How do you think about market timing?
32:28 How do you think about reserve allocations?
34:35 What do you do if you lose trust in a founder?
37:45 How did becoming a parent change you?
39:47 How do you manage ego?
45:55 How have you changed as an investor?
48:26 Are VCs upfront today?
50:54 Outcome scenario planning
54:27 How do you approach unit economics?
57:16 When have you gotten it wrong?
58:48 Fear Of Missing Out - Why Mike doesn’t have it
1:01:48 Do boards add value?
1:04:59 What mistakes do young board members make?
1:05:54 Time allocation between companies
1:08:40 How should founders prepare for board meetings?
1:10:16 How to keep open communication
1:12:09 Rapid Fire Round - Favorite book
1:13:35 Biggest weakness of venture partnerships today
1:15:14 US VCs entering European deals
1:16:17 Selling on the way up
1:18:55 Pro rata investing
1:20:18 How do you deal with the tough times?
1 21:32 What would you like to most change about venture?
1:23:55 Most recent publicly announced investment
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In Today’s Episode with Mike Chalfen You Will Learn:
1.) Entry Into Venture and The Broken Customer Experience of VC:
How did Mike make his original entry into venture way back in 1996?
What does Mike mean when he speaks of the difference between “managing your career vs the money you invest”?
What does Mike believe are some of the greatest challenges of venture partnerships today?
What does Mike believe that the customer experience in venture partnerships for founders is broken today?
How did seeing the prior booms and busts impact Mike’s investing mentality today?
2.) Portfolio Construction 101:
How does Mike think about portfolio construction today?
With 9-10 core positions, why does Mike disagree with the traditional notion of “diversification”?
How does the decision-making framework for Mike change when considering new investments vs re-investments?
Does Mike believe that pro-rata is a lazy notion? What does Mike need to see on the upside to re-invest?
How does Mike feel about the importance of temporal diversification? Why did Mike increase the cadence of his investing in 2021? Does he regret the increased speed?
3.) The Market 101:
How does Mike think about the importance of market sizing? If we always underestimate the size of our winners, is this market sizing exercise not destined for failure?
Why does Mike believe so many over the last few years have poorly sized markets they invested in?
How does Mike assess market timing risk? What market risk is he willing vs not willing to take?
What have been some of Mike’s biggest mistakes when analyzing markets in the past? How did it change his perspective?
4.) Boards 101:
How would Mike describe his style of board membership today? How has it changed over time?
Why does Mike believe that boards at seed are not valuable? When do they become valuable?
What is the single biggest mistake Mike sees so many young board members make today? What is his biggest advice to young board members?
How does Mike advise founders on preparing for boards? What does he want to see?
What are the biggest mistakes founders make when conducting board meetings?
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