A lot of volatility goes into investment decisions.
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.
Raising money is the second hardest part of building startup after finding product market fit. Investors are not sympathetics. Investors are skittish because they make large decisions with limited domain expertise.
Some “bootstrapped” companies started out as consulting companies and used earnings to turn into product companies. Consulting route can take years for efforts to fruition.
Over the past few years less entrepreneurs are pitching with a slide deck. However, investors are evaluating how founders convey a story and a deck illustrates that skill. Founders can have success without a deck, but this isn’t always optimal. 6 reasons why good presentation decks are impactful:
A slide deck transports the listener to the conclusion to invest