Venture capital investors share how they made the most of their cringe-worthy mistakes

Some of Australia’s top venture capital investors recount their biggest failures and what came next.

Blackbird Ventures associate Christie Jenkins.

Start-ups fail. It’s inherently a high-risk sector but with the potential of high reward. For many founders, some of their worst moments have also proved to be pivotal moments of growth.

Ahead of a “F*up Night” event in Melbourne this week, we asked investor alumni and speakers from Wade Institute’s VC Catalyst program to share their experiences.

Jodie Imam, co-founder and co-chief executive Tractor Ventures

I thought if I built it, they would come. They didn’t! I became paralysed with stress. I literally would sit at my computer unable to type at one point. We had sold our house to build a marketplace, back in 2011 when you could not buy the tech off the shelf. We spent three months scoping the build and six months building it, without once talking to a customer.

Tractor Ventures co-founders Matt Allen, Jodie Imam and Aprill Allen.

It took three months after the launch to get our first customer. Once we started attracting customers to the website we then had the task of undoing lots of the build and building new features that customers actually wanted.

What did you learn from it?

The learning came from the customers. One customer actually screamed at me over the phone. He was so frustrated with the onboarding and payment process we had built. After wiping away the tears I started to take on feedback and we started rebuilding the site. I also needed to reset my expectations on the revenue growth I thought we would have. I reached out to a mentor who helped me do this. That conversation is what enabled me to move forward.

In what ways did the failure shape who you are today?

With that amount of risk exposure and the depths of that despair I will never forget to follow a lean start-up methodology.

It has completely shaped me. Everything I do now is a process of customer testing and iteration. Every founder I invest in takes the same approach – “Minimum viable product” – all the way.

Dominic Pym, co-founder Up and investor

Over the years I’ve been involved in dozen of companies. One of the biggest mistakes I’ve made is choosing the wrong co-founders. When that happens it can be profoundly destructive, especially if it’s not resolved quickly.

Dominic Pym. Picture: David Geraghty

What did you learn?

With every new business I got better at recognising my strengths and weaknesses. Given your co-founder is one of the first, if not the first, decision you make when starting a business, it’s the most critical decision. Each time I chose different co-founders and I was able to experiment and reflect on our successes. Eventually, I knew exactly what I needed in a co-founder and what I wanted. After a while, you just know it’s right.

On reflection, I now call the perfect co-founder “the yin and the yang”, where you complement each other’s weaknesses and amplify each other’s strengths.

Christie Jenkins, athlete, investor at Blackbird and adviser at Athletic Ventures

People say it sounds like a gunshot. And frankly, that’s what it feels like. The pain is awful, but the sound … there can’t be a worse sound than hearing your own tendons snap.

“March 1st, 2018” read the date at the top of my hospital report. “Full rupture of the left Achilles tendon.” The doctor’s handwriting was a smooth scrawl like he’d seen my injury a thousand times already and it meant nothing to him.

If I had been writing, the page would have jagged words, sharp punctures for the full stops, and tear stains. A lot of tear stains.

Christie Jenkins. Picture: Percival Mayo

Every time I looked at my crutches I was reminded of how far away I was from walking, let alone playing beach volleyball again.

The physical pain was nothing compared to the mental pain. Devastation that I may never play again. Loss of identity – if I’m not an athlete then who am I? And so much time … time that used to be filled with training now spent ruminating on not being able to.

What did you learn?

To move past the initial sense of loss a few strategies worked: Planning something (like a holiday) to look forward to, keeping in touch with your group, find a story of someone else who faced the same failure and recovered from it, keep exercising (you need the endorphins), and work with a mental coach. Finally, reassess what you want – do you want to escalate your commitment to the path you are on so you don’t fail like this again, or is this a chance to reconsider your project or career?

Venture investing is mostly disappointments – on both sides of the table. Each day I hope to find an incredible founder and company to invest in, and yet I will probably only make one or two investments a year.

Rachael Neumann, Wade Institute VC catalyst lead facilitator, founding partner Flying Fox Venture

What are some common reasons founders fail, and what can investors do to help mitigate these risks?

Start-ups fail. It’s high risk. That’s because founders aren’t doing something easy and not following a well-trodden path. By definition, they are often inventing or innovating something for the first time or taking a solution to market in a novel way. If there was a guaranteed outcome, there wouldn’t be huge upside potential.

The best way for angel investors to mitigate their risk is to make several investments and be thoughtful about their portfolio construction.

Jodie, Dominic and Christie will be speaking at Wade Institute‘s F*up Night Melbourne on Thursday 16 February 2023.