Can a Value Investor Become a Great Venture Investor?

An Interview with Stage Venture Partners’ Alex Rubalcava

Alex Rubalcava amazes me. Why? Because I know of no other professional value investor who has pivoted mid-career into venture capital. And not only has Alex pivoted, but he is absolutely thriving and killing it.

I’m incredibly fascinated by his journey, the difference between venture and value investing and how he thinks about investing now that he is a venture investor. And as a friend, I could not be prouder of him. (And as an investor in one of his funds, I’m quite happy too!)

Here are three ideas I learned from this interview.

1.     In software venture investing, focusing on the downside is the opposite of risk management. Alex explains, “Prudent risk management is much more about focusing on what can go right, how big something can be, and really evaluating it on an ongoing basis to determine whether it's going to achieve those kind of goals.” Listen to him explain this in the interview, it was fascinating.

2.     He invests only in companies where there is product risk and avoids companies where there is competition risk.

3.     And because product risk is such a big risk, the three most important questions Alex needs answered before he invests: “Can you ship? Can you sell? And can you hire?”

I’m still processing our conversation. Alex’s way of thinking reminded me of my discussion with Fred Liu last year. Both Fred and Alex are original thinkers and I think all investors can learn from them.

Here is the transcript should you want to read it.

Alex Rubalcava Interview Transcript

And be sure to follow Alex on Twitter and the Stage Venture Partners Twitter feed as well.