The common VC passes are pretty cliche. “It’s a bit too early for us but we’ll be rooting for you from the sidelines,” “We were intrigued and impressed but just can’t get there at this time,” or just plain ghosting you without any feedback. I’m writing this knowing that despite trying to do better, I’m not absolutely innocent either. Which is why it was refreshing to be asked by Ethena’s CEO to do something publicly that investors normally aren’t interested in rehashing: discuss why we passed on leading the seed round for her startup.

Even more importantly, and independent of whether we were a ‘lead investor’ or not, I’ve had the chance to spend meaningful time with the cofounders over the past few years and consider them to be wonderful friends, in addition to leaders I admire. But the initial pass was, in investment terms, a huge mistake and something I regret. As is the case with startups like Ethena, that first opportunity would have given us a larger ownership stake than all subsequent checks combined. Facepalm.

The TC discussion was about building, and investing, in undiscovered markets — areas which at first glance might be misunderstood or perceived as ‘too small’ but which are actually quite fertile for venture sized outcomes. Compliance training is an example.

My takeaway from the chat is that Roxanne’s disposition initially was to ‘sell the business, not the vision’ and that reinforced some of the concerns we had about market size and ability to scale sales. Whoops.

People ask me what do I think makes a successful founder and investor relationship and I always respond: trust and context. The ability for an investor to earn the trust of a founder and maintain that over time. And the understanding for the context (industry, culture, founders’ personalities, etc) that surrounds this company so that you’re giving them specific, relevant advice and counsel, not just startup platitudes.

Thank you Roxanne (and Anne) for the mutual trust and context. Despite my mistake, it has made working with you both an absolute joy and I’ll continue asking you to take my capital every time there’s an opportunity to do so!