INVESTMENT PHILOSOPHY

Consider this: Venture capital funding is often responsible for taking startups from the napkin sketch and slide deck stage to products and services that disrupt their respective industries and deliver handsome returns. Yet according to the National Venture Capital Association, out of every 100 business plans pitched to VCs by entrepreneurs, only about 10 will get a second look, and only one of those will score funding.

Rules of Attraction

If an entrepreneur says, “Hey come with me. It’s all uphill, in the snow and it’s going to really suck. But I swear it’s going to be fun” and still manage to snap up talent, I’d be sold. Founder who can lead a team, attract and recruit people and have enough charisma to convince others to come along in this journey will score funding.

You don’t need to come from central casting or flash a winning smile, either. There’s not one size that fits this, but what is attractive is that the entrepreneur is working on interesting problems that would make an impact, something he knows will attract others to sign on to his vision.

There’s another component to this that’s not always evident in the first meeting. Building a company is a pretty intense experience, so he needs to feel comfortable enough with a founder to join them in a relationship that could last for a decade or longer.

Forget the Formal Presentation; Focus on the Demo

One of the best pitches I ever saw was one that I requested. The entrepreneur started by demoing the product right on the spot. Without any slides or financial projections, I wanted to invest. I was taken by surprise when I discovered that the entrepreneur had flown in from NY City, leaving his then 3-week-old child at home with his wife. I was so blown away in the first meeting, even though the company was only a few months old, it only took 20 minutes to agree to invest in the company.

I love to tell people they need to be memorable.Though I understands that entrepreneurs are immersed in their idea 24/7, they need to be a be able to articulate it, too. It’s not just about the technology, it’s about being able to put yourself in the shoes of the customer and tell a compelling story. Founders should focus on the problem they want to solve and write a one-page ad for it. People don’t want to buy technology, I look for a team that brings more than just technical insight to the pitch. They need to sell me on their sales pitch. That can be accomplished through prototypes or a demo of the product or service, anything that helps investors, who are often bouncing from meeting to meeting, to visualise it. Even step-by-step static pictures of what the entrepreneur wants the experience to be gives the investor a sense of where they are going.

Have Conviction

Sometimes even savvy investors miss opportunities the first time. When an entrepreneur spent an hour trying to explain how the world of influence would be measurable, i passed on the idea. I believed in him and his vision, but I was looking at the market opportunity. All was not lost though. The entrepreneur knew where the world was headed. He came back next year and pitched to me again. I made the investment. 

Own Your Failure

A successful entrepreneur needs to be schizophrenic on some level. They have to have an incredible inspirational vision and the ability to be a leader and attract people. They also need to be incredibly paranoid about the what-ifs. Founders should pre-think through everything that might go wrong. My favorite companies are super excited about their idea and also know the reasons why it might go south, and all the reasons to prevent it from happening. Some failures are inevitable, but in this way, founders can show the investor they’ll be able to manage the risks out of the business sooner.

What Not To Do: VC Pet Peeves

There’s a guy who emails me probably every six months and blind copies half of the investors on Sand Hill Road. An unworthy idea notwithstanding, this person says in his note that he’s been sending this email since 1998. I replied and politely declined the opportunity the first time. Now he just deletes them, unopened.