You've possibly heard it before. VC's date thousands of startups, to pick just one. This is more imperative in the consumer market as supposed to B2B/enterprise startups as it is a .001% exit rate versus 1% after seed funding. Furthermore, the average VC-entrepreneur marriage on the term sheet lasts about 10 years, longer than the average marriage, so these entrepreneurs must be someone super bomb the investors and their team want to work with.
A16z's Scott Kupor's new release is an insider's view of venture capital to aspiring new investors and entrepreneurs alike, to maximize how you can make the most out of precarious situations and ease the daunting commitment to the relationship.
Venture is very much about aligning your incentives and user bases with your investors. The goal of a good venture capitalist is to help you scale your business.
When a VC invests in you, they are making an endorsement. Ensure that your brand, your values and mission statement align with that investor's brand as that easily allows you to work with other portfolio companies and prepare yourself for potential investment.
Do Your Research
There are three things an investor grades you on when evaluating your pitch deck:
1. your team
2. your product/market fit
3. you, your passion, your story
Your secret sauce is your core team- we often can change the market, but we cannot change people. How good are they at executing and what is their caliber in ideas? Is your company mission first, and not business first? The best businesses solve a problem and are not there for sheer revenue. After building a world class team, everything else should fall in place.
Listen to your Customers
As the CEO of your own company, VC's value if you're able to see the other side of the story.
At Bonsai we believe in value creators but with dichotomy in thought. It's what Shakespeare and Heisenberg would both term as holding negative capability or "non-super imposable" thoughts at once. For a venture capitalist as Kupor notes, these are "strong opinions, held weakly".
A startup essentially is an investment hypothesis. Sometimes that hypothesis doesn't always work out, so prepare to relinquish your past judgments and pivot.
Most of all, Get Inspired: Be a little delusional.
Build a community!! Get pumped up!! If you don't believe in you, who will. The consumer market is all about the community, and the more loyalty you bring to your product and the more it resonates with your users, the more traction you will have.