Sequoia Capital partners share how they decide which startups get a yes

"Sequoia's partners go into investment decision meetings to determine whether startups make the cut - and there's a system for striking gold, two partners said. In an episode of the "Jack Altman" podcast released on Tuesday, Sequoia partners Alfred Lin and Pat Grady shared how their team decides which startups get a cheque. "We've been recording the number that everybody votes on every investment for more than a decade now," Grady said. "Our internal data shows that consensus versus non-consensus does not matter at all.""

"A score above six is considered "positive," and a score of four or below is considered "negative." "If everybody's a six, probably shouldn't make the investment. It's consensus, but nobody has conviction," he said. "If three people are nines and three people are one, we should probably make the investment because the presence of the nines is a much more powerful signal than the presence of the ones.""

Sequoia measures partner conviction by recording individual votes on every potential investment using a one-to-ten scale. Scores above six register as positive and four or below register as negative. The firm treats high variance and strong positive outliers as a clearer signal than unanimous middling scores, favoring investments with polarized partner opinions. Partners prioritize conviction because the firm seeks volatility and big, risky outcomes rather than safe consensus bets. Junior investors receive training to embrace risk and identify outlier founders and ideas that can generate outsized returns. The approach emphasizes conviction-driven, high-variance decision-making over consensus-based caution.

Read at Business Insider