1/ What drives decisions for (bad) VCs. This is going to be fun.
2/ Who else is in the round: At least half of VCs actively just admit they are influenced by who else is in the round. Why? They have a lot of reasons related to more smart people around the table. I’ll give another: you don’t get fired by co-investing with @sequoia
3/ What their partners think: Not a lot of VCs have the courage and capacity to do a deal that their partners don’t like. That deal goes bad and it isn’t a joking “I told you so.”
It’s “Thanks- let’s make you a venture partner for a year as you transition out.”
It’s “Thanks- let’s make you a venture partner for a year as you transition out.”
4/ What entrepreneurs they respect think: VCs think entrepreneurs that have done well are really good at spotting talent and opportunities. I would love to see data on founders being better stock pickers.
5/ What @TechCrunch thinks: Hype. I know everyone is laughing and no one believes this is real. And then there are a portion of VCs that are staring at their shoes, sheepishly kicking the dirt right now because they know they are more likely to invest if there is good TC article.
6/ KPIs: Yeah…….this low. Key Performance Indicators (ideally revenue but usually some other derivative metric) are something VCs still look at to make sure they aren’t completely off base- but it doesn’t play as big of a role as 2-5.
7/ Market size (as long as it resonates with their perception): Tell them that drones will be a $10b+ mkt in a few yrs? Ohhs and awwws. Tell them personal care is a $100b+ market today? Crickets. (they dont care or believe you).
statista.com/outlook/254/10…
statista.com/statistics/431…
statista.com/outlook/254/10…
statista.com/statistics/431…
8/ Were there 3 random interactions in the previous week with the investor and product or the investor’s spouse and the product? Here is my $5 bet. VC hears about a product at Madera, from another entrepreneur, and from their spouse? 8x more likely to invest after those 3 pts.
9/ Other awards/press/hype- just reinforces the messages above. Ton of influence by hype in tech vc. Would love to see the data on this too.
10/ The existing system is broken.
It is that clowny decision making criteria that helps give me more conviction that systematic VC is the future.
It is that clowny decision making criteria that helps give me more conviction that systematic VC is the future.
