I rarely talk about my day job here, but I want to make an exception this week, as it touches on several TiB themes. I’m one of the co-founders of Entrepreneur First
(EF), which pioneered a new form of venture capital, which we call “talent investing”; we fund individuals before
they’ve started a company, purely on the basis of their potential, and support them them find a co-founder and build a startup from scratch. This used to be pretty controversial. Last week, one of the first companies we helped to build through this model, Tractable
, announced a funding round that values it at $1bn, the first EF company to reach this milestone. I wrote about it here
Why is this of more general interest, though? Mainly because governments and investors tend to see high-growth technology companies as (a) highly important but (b) something whose supply is fixed. Indeed, the conventional wisdom is that it’s hard for policymakers to have a positive
impact on the number of high quality startups at all; if they want to see more such companies, the best they can do is “lay the table
” (i.e. get rid of bad
policies), then get out of the way, wait and hope for the best.
Tractable’s story (alongside academic evidence that we discussed in TiB 165
) suggests that this isn’t true: the world may be missing out on most
of its best founders. Talent investing allows an abundant resource (talent) to be transformed more or less predictably into a scarce one (valuable startups). My friend Alex once called this 21st century alchemy
. I am obviously deeply biased, but this seems to me a more radical and important fact than is generally appreciated. EF is tiny today but, at scale, perhaps there could be 10x - even 100x - as many valuable startups created each year, even and especially in places outside Silicon Valley, as there are today.
While I’m on the topic, I should say that you can apply to join EF here and if you’re a policy maker or capital allocator who’d like to increase the supply of great companies, I’m always happy to chat.