Finding an Investor Who Is in Love With You
I often talk about what I'm looking for when I meet with an entrepreneur. Above all else I'm looking for a genuine passion for what the entrepreneur is doing. It's even a direct quote in my Twitter bio.
Of course passion isn't enough. You need a set of innate skills that differentiate you from the thousands of others who set out on your similar journey. You need a great concept in which you will build something that is truly unique and that will be valued by your customers. But without a passion for what you do I am dubious about your chances for success.
If I had to put a number on it I'd say one in 20 pitches -- maybe one in 30 -- are by an entrepreneur who comes across as truly passionate about her project. You can sense when it is a "mission" for this entrepreneur to succeed, and she will continue the journey even if success isn't easy or immediate. It is in her blood to see this journey through and try to launch her product or service to the world.
The other 29 pitches involve many smart people who "think they have an angle on making a buck," which I know is an unfair over-characterization of the situation, but you can genuinely tell when somebody isn't "all in." One of my favorite entrepreneurs -- one of the people with whom I most want to work -- once came to me with a business serving young moms. He was a 23-year-old at the time, and as much as I wanted to believe he cared about how to get children to eat properly, poop on the potty or sleep through the night -- it was a stretch. So we haven't yet worked together but I'm still hoping. (He ditched that business years ago.)
It seems obvious. But what about the reverse? Are your investors truly passionate about what you do? Is he willing to go to the mat with you in good times and bad simply because he believes against all rational views that your mission will work in the end?
Does your investor eat, sleep, breath your industry or product? Does she live your journey?
I only say that because after years as a VC I can always tell when my peer group invested in something because "it seemed like it would make money" versus when they invested out of passion. And in all honesty over the years I've experienced a bit of both myself.
On reflection of the role that I want to play as a VC it is clearly in the camp of passion. I really want to start my journeys only with people with whom I want to work closely with for the next five to seven years or more. I only want to work on projects in which I believe can produce truly amazing change in an industry or in the world.
I'm a VC. So of course I want (need) to make money for my investors (LPs). But the two can of course go hand-in-hand.
I have watched the likes of Chris Dixon, Marc Andreessen and Fred Wilson talk openly and passionately about BitCoin. If I were an entrepreneur in that space I think I would seek them out as a starting point because their interest seems authentic.
I follow Jason Lemkin closely (he's a long-time friend) and he speaks frequently and passionately about SaaS businesses having built a successful one himself. His blog is even called SaaStr (a bit too close to Suster if you ask me ;-)). My partner Steven Dietz is an auto enthusiast and more than just an admirer of amazing cars he has worked around the auto industry for 20 years and has backed a couple of billion-dollar startups in the category. Whenever somebody has a car startup I send it straight his way. I haven't met any VC better connected and more thoughtful in this space.
As I reflect upon the journeys I've taken as a VC since 2007 I realize that the ones I was best at -- and that I enjoyed the most -- are ones that began by falling in love. I know that sounds corny but it's true.
I fall in love with entrepreneurs. Maybe it's two to three times per year but not much more. Something in their strong sense of purpose for what they're pursuing and my belief both in them and their concept stands out. This is certainly the case when I met Nick Halstead, the founder of DataSift which is why I invested in their A round despite the company being based in England (a long way from home).
I fell in love with Yoni Bloch and Interlude who have produced the most stunning interactive videos I have seen. In this case I fell in love after he had already gotten married to well-known investors.
I have placed a much bigger emphasis on falling in love as a criterion for my making an investment. I think this is especially true since I'm an A round investor (some B's but mostly A's or seed) and I will be joining at the stage where a concept is not yet proven and where it may be three years until we see real traction. I want to wake up in the morning on weekends thinking about the company, the product, their positioning.
It's what happens to me at ePoxy since I'm very public about investing in technology companies in the video sector. They have one of the most elegant products to help with video distribution that I've ever seen and one of the most talented product teams I've worked with in LA. Since I work with video a lot I have the chance to be both a product pontificator and an avid user of the technology.
I have fallen in love twice recently. One with a company that produces games and educational products for children that we will announce in the next few months. And one with another video company that will be moving to LA as part of my A round investment that will close in March. These are both new journeys and I can't wait to see how they develop.
I know the difference in myself and also in the tone and interest level of fellow VCs when they're in love versus when they're just doing their job. As an entrepreneur I think it's far more important to seek out investors who love you (no matter what) than it is, for example, to maximize valuation or find the perfect VC brand. Much like investors have to feel there is more than just passion in you -- of course you need to find investors who have both extreme competence as well as passion for what you do.
I write this because I know how difficult it can be to find a potential investor and to decide with whom you'd like to try to work. You may not have a choice -- many don't. But if you do, or if you're simply deciding which VCs to put in super-human effort to targeting as potential investors, I would encourage you to think about their core beliefs and interests.
The Lerers for content and commerce. Po Beabody with content businesses. Roger Ehrenberg with big data and also financial technology companies. Greg Bettinelli with commerce businesses. True Ventures with hardware startups. Bill Gurley with marketplaces. I know none of these people want to be defined by a certain category but my point is: finding investor passion as a key criterion.
And make sure when your investor agrees to write you a check you feel like somebody beautiful on the altar -- not somebody being married for his or her money.
This article was originally published on Mark Suster's blog, Both Sides of the Table.