The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch · Harry Stebbings

20VC: The Venture Model is Broken | You Need to be Greedy and Selfish to Win Early Stage Investing | Why Margins Do Not Matter for Early-Stage Startups | The Growth Rate that is Required in a World of AI with Gili Raanan, Founder @ Cyberstarts

March 28, 2026·53 min·4 clips

Gili Raanan argues the venture business doesn't work and warns of serious catastrophe for many players.

Gili Raanan, founder of CyberStarts and former General Partner at Sequoia Capital, joins 20VC host Harry Stebbings to discuss the structural dysfunction of the venture business and his framework for finding exceptional cybersecurity companies. Raanan opens by stating bluntly that the venture business does not work as an industry -- returns are concentrated among a small number of elite firms and the flood of capital entering the market is inflating entry prices without a corresponding rise in exits. In Israeli cybersecurity alone, approximately 150 companies are funded each year but only one or two typically achieve unicorn status, down from the anomalous seven of 2021. He warns LPs who have distributed their venture allocation evenly to expect significant losses. Raanan describes CyberStarts's foundational discipline: intense focus on product-market fit by aligning pain points with solutions that users love, buy more, and recommend; and reading growth velocity as a persistent predictor of company DNA rather than a one-time event. He uses Wiz as the canonical example -- first year selling quarters of one, two, eight, and 24 million dollars -- and notes that this pace reflects something intrinsic that tends to persist. He contrasts this with Sierra, a portfolio company that sold zero for two consecutive quarters before resuming explosive growth, illustrating that great companies can zig-zag even when their DNA remains exceptional. Raanan acknowledges he regrets every Wiz share he sold in secondaries but defends those sales as appropriate for demonstrating DPI to LPs at an early-stage firm. On fund sizes, he argues that large funds are justified by genuine capital requirements of large companies, but inflated seed-stage entry prices will eventually produce catastrophic returns for many players. CyberStarts runs an Employee Liquidity Fund with annual tender offers so portfolio company employees can diversify before IPO, citing talent retention as the primary motivation. Raanan views IPOs as marketing events signaling permanence to customers and employees, not financial events. He argues that accumulating fifty zero-to-one journeys with founding teams makes you a better investor by forcing you to become a better listener. The tone is measured, frank, and analytical throughout. The episode is aimed at investors, LPs, and founders in venture and cybersecurity.

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