Reflecting on passed investments

Every 3 months I dig through my "passed company" folder to look at what investment opportunities we passed on and why.  Inevitably, there are a few companies that are near-misses, but we end up passing on for whatever reason.  Did we pass because we didn't think the team was great or because we didn't believe that they could get a product launched?  Did we pass because of lack of traction in the beta release or because of concerns on valuation?  Looking at my "passed company" folder gives me an opportunity to test our reasons on passing and to see 3 months later if the entrepreneurs could actually execute or prove our concerns wrong. 

While many times I find doing this reflection further confirms our reasons for passing, I also find myself from time-to-time sending up a follow up note to check in on these near-misses or doing a quick Google search to see how the company has progressed since our last communication.  Inevitably, there will be a few that "got away" and seem to be doing quite well.  No one is perfect and looking back every quarter gives me an opportunity to better hone my investing acumen and further refine my understanding on what separates a potential winner from a loser.  Many times we are so busy that we can only look forward to the next new thing or next hot deal, but I encourage you to occasionally take a step back, look in the rear-view mirror, and learn from your past history.  I promise you that this reflection will only make you a better investor in the long run.

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5 Responses to “Reflecting on passed investments”

  1. David Miller Apr 5, 2011 at 4:42 pm #

    Ed, you left out the best part: what did you learn from the last 3 months (or is it proprietary) and what did you “pass on” on?

  2. Ed Sim Apr 5, 2011 at 5:43 pm #

    too fresh and also dont want to list companies that I passed on either

  3. John Caddell Apr 6, 2011 at 1:51 pm #

    Ed, this is a great post. I really like the idea of periodically reflecting and looking for patterns in what went well and (especially) what didn’t go the way you hoped. I have a site called The Mistake Bank (http://mistakebank.com) where I post stories of things that went wrong in business and what can be learned from them. On this site I also discuss ways of learning from mistakes (or things that didn’t go as planned), and your post is a perfect example of that.

    regards, john

  4. John HInnegan Apr 12, 2011 at 8:49 pm #

    Could you keep notes and maybe post them X months later? Even a look back on what you passed on last year would be great to read.

  5. Larry Tutino Nov 13, 2011 at 8:23 am #

    Hi Ed, I do the same thing with real estate deals I follow. I have my favorites/passed on file that I go back to. Checking what properties actually sold for and duration of listing is a vital tool I use to shape our buying and consulting preferences.

    Enjoy your day, Larry

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