12 Secrets To Attracting Investors To Your Startup
As seen on LinkedIn
Welcome to this — the first in our new 12-part series.
(I lead with the 12-part piece because by putting it out here on our site, I’m effectively forcing us to commit to writing the next 11. Nothing like engineering online social pressure as a motivational tool!)
One of the most common questions we get, as a young seed-stage VC, is something along the lines of this: “What do you guys look for in a company when you invest?”
This is most memorably asked of us, en masse, after we give a talk at a conference or such. Eager entrepreneurs, intrapreneurs and want-repreneurs enthusiastically barrel down the aisle, knocking down their less engaged colleagues in the process, looking for the “keys to the funding castle.” On one hand, it’s very validating to have folks so fired up. On the other, it’s frustrating because a 30-second exchange in a crowded theater is not really the place for thoughtful discourse.
So here’s what we’re doing about it: In the spirit of helpfulness, transparency, SEO optimization, website content freshness and good humor, we present:
12 Secrets To Attracting Investors To Your Startup
First and foremost, we’re looking for companies that have a clear, elevating mission.
Let’s break this down with some old-school sentence diagramming.
Clear: Clear, to us, means simple and understandable. Sequoia Capital famously hangs pictures in their offices that remind everyone: “Customers will only buy a simple product with a singular value proposition.” We couldn’t agree more with our order-of-magnitude-more-famous colleagues. You wouldn’t believe how many discussions we have weekly with folks who use their time with us to weave a complicated web of mystery, intrigue and ambiguous potential. Startups, by definition, are at the start of their journey, but many founders come across as being ashamed of where they are today, instead overfocusing the discussion on a range of sophisticated alternate futures. While we appreciate that there’s a strategic vision at play, don’t forget to embrace and communicate the value of your present tense “thing,” however immature it might be.
Some people, it would seem, have a superhero power of reducing complexity into simplicity — of kneading elegance out of chaos. I love working with, and investing in, those people. Tragically, others excel at the inverse: seeking opportunities to substitute straight talk with hoity, polysyllabic, acronym-laced jargon; trading common sense for provocative theoretical sidebars at every turn. We’ve all worked with that dude. Let’s call him Phil.
<Scene: Any office anywhere>
Janet: “Where are we with the Q3 product road map, Phil?”
Phil: “You know, Janet, I find quarterly milestones…clichéd. And, really, are we truly building a product or a next-level offering? Are we even builders at all?”
Yeah…we’re probably not investing in any companies founded by Phil because Phil isn’t about stamping out ambiguity. Phil is about generating ambiguity. “Fuzzy Phil” might make an excellent analyst, critic or consultant because he is actually really talented at finding patterns and relationships. That said, early-stage companies need to get quickly from A to B, and there’s little room for unnecessary analysis paralysis.
Pro Tip: If your mission statement doesn’t fit on the back of a business card, you don’t yet have a mission statement. As Mark Twain famously said: “If I had more time, my dear, I’d have written you a shorter letter.” And no, Fuzzy Phil, this is not the on-ramp to a discussion about the relative merits of smaller font sizes.
Elevating: Elevating, to us, essentially means “inspiring.” We say elevating because it’s a lower mileage word and because “inspiring” tends to elicit eye rolls among the suit-and-tie set. But make no mistake: We favor businesses that have an inspiring mission that brings out the best of our natures and dares to make a better world.
We could have a frosty beverage together and compare and contrast our definitions of “a better world,” but for RLV, it means that we’re keen on businesses that take a systems-level approach to problem solving. They’re not out to win a competitor’s market share. They’re not out to disrupt some legacy business for disruption sake. They’re not in it for arbitrage and quick exit. Rather, they’ve developed a truly novel “something” that, properly scaled, can improve the way everyone works and lives.
This “rising tide raises all boats” mentality is a core value of ours. Heck, it’s part of the reason why we’re comfortable sharing our honest-to-goodness evaluative criteria here on our site. If more startups (and investors) would hew to the principles we share in this series, the entrepreneurial community would be better off, and that’s something we care about.
Bottom line: We prefer to invest in simple businesses, run by founders who “think straight and talk straight.” We like it when they, with that same straight face, can show us how they can use that simple business as a catalyst to make the world a better place.
Are you a feet-on-the-ground, eyes-to-the-skies entrepreneur who finds your head nodding in agreement with this perspective? Give us shout. We may be able to help you out, one way or another.