The decision for a founder to take an investment from a venture capitalist (VC) firm and the decision for a VC firm to invest in a founder depends on the founder-investor fit.
What founders care about: 1. The best deal terms 2. The speed of the investment decision 3. Brand of the individual partner leading the investment 4. Specific expertise from a former founder Founders have much more desires, making it crucial for VC firms to find founder-investor fit as they think through their strategy.
To find founder-investor fit, VC firms focus on: 1. Diversity across gender, race, age, and socioeconomic background. 1. E.g. The BLM movement has shone a light on the lack of Black VCs. 2. Generational transition 1. Why VCs care about this: 1. Investors active during the dot-com era are beginning to retire. 2. A new crop of younger, more diverse investors in partnerships is rising. 3. Brand at the firm level and individual partner level 1. There can be tension between a firm's brand and an individual partner's brand.
Focusing on founder-investor fit can lead to a competitive advantage for a VC firm.