Startup Investment: WTF vs FTW Deals
#124 Angelinvesting.it - From idea to Series A - Weekly Newsletter
Dear reader,
In startup land, there are only two types of deals worth pursuing: the WTF deals and the FTW deals.
WTF deals (What The F*ck) are the contrarian bets where all your peers think you've lost your mind. Sequoia's investment in Airbnb was a classic WTF deal—only one partner made the call while the rest of the partnership was skeptical about the idea of strangers sleeping on air mattresses in each other's homes.
FTW deals (Fight To Win) are the hot opportunities everyone is ready to kill for allocation. Right now, Lovable in London falls into this category—every investor is fighting tooth and nail for access.
In my experience 80% tend to be FTW deals and only 20% WTF deals. But here's the paradox: an industry that prides itself on being contrarian has far too few WTF deals. Instead, investors often look like they're chasing trends, fighting over the same opportunities like hungry dogs over scraps.
The real problem? Most investments don't qualify for either category
Even worse than the imbalance between WTF and FTW deals is this uncomfortable truth: more than 80% of VC investments I see don't actually make sense at all.
Both WTF and FTW strategies can generate outstanding returns for rational investors with balanced portfolios and deep understanding of risk-reward dynamics. The problem is that most investments in VC don't qualify for either category—they're simply bad investments, full stop.
In the VC world, only one law matters: the power law. You need to hit, and hit big. Hit rate matters, but far less than the magnitude of your wins.
Most investments are unconsciously biased by herd mentality. As humans, we construct our reality from data points that—thanks to the internet—are remarkably similar across investors. This shared narrative becomes the foundation for what we believe will be a hit.
The fatal flaw with this approach? You can't generate outstanding returns while stuck in the herd. The best investors know when to follow the crowd (FTW) and when to stand completely alone (WTF). Everyone else is just making noise.
Have a great weekend,
Simone