May 27, 2016
Your big idea and market validation – checked. Scalable model and further monetization strategy – checked. A great team ready to hustle and a user base growing day by day – checked. Is there anything else to add to the list prior to approaching a VC?
Knowing the exact algorithms of how VCs decide upon giving investments would make any founder’s life much easier. In general, Josh Linkner says that there are no two same companies and founders. Sometimes VCs place a bet on the horse or the race (product or market), on other days – the jockey (a founder). And here are the exact qualities top VCs are considering when they do play riskier and put all chips in one thing.
You Need to Have Grit
A healthy dose of grit is an essential trait for any leader. During early stages you’ll be placed under tremendous pressure and you’ll need all the grit and guts to overcome it.
In fact, researches from University of Pennsylvania found out that as a key element of a person’s personality, grit plays a more important role in succeeding rather than IQ. The same study suggests you to work on the following building blocks of grid to see how you can improve:
- Having a clear goal
- Staying determinant despite the surrounding doubts
- Persistence over fear
- Flexibility in the face of roadblocks
- Self-confidence about figuring things out
- Capacity for connecting and collaborating with other humans.
- An inner strength that brings them to their goal
You Don’t Need to Be of Certain Age
Think you can get funded only when you hit a certain age or you are too old for a startup? Through that belief out of the window. Here’s a quick overview of how old were some of the most successful entrepreneurs, when they launched their companies:
Facebook (20), Microsoft (20), Apple (21), Google (25), Twitter (30), Amazon (30), Tesla (34), Oracle (35), Netflix (37), Zynga (41), Walmart (44) and McDonald’s (53).
In general, people over 55 are twice as likely as people under 35 to launch a high-growth startup.
Most VCs also agree that age is completely unimportant for founders and CEOs. Younger types can be more adventurous, learn fast and cultivate an A+ team of advisors around them. Older folks may have a better sense of maturity; a record of living the dream and achieving financial independence and failing miserably afterwards; may already have a playbook that would help them to avoid common mistakes, yet be slightly less innovative and play more cautious.
Having Imagination Is Important
As Paul Graham outlines in his essay: “In the startup world, most good ideas seem bad initially. If they were obviously good, someone would already be doing them. So you need the kind of intelligence that produces ideas with just the right level of craziness”.
You need to imagination to solve new problems quickly and come up with out of the box solutions at a daily basis. Did you know that Airbnb was considered as an insane project by Y combinator? VCs could not believe such a large amount of people would want to crash in other people’s houses. It was the founders whom they liked and deemed worthy of giving the investment. As we now know, Airbnb turned out to be on the right size of crazy.
Serial Entrepreneurs and Fresh Starters Are Considered Equally
Some entrepreneurs tend to believe that raising huge investments from VCs is only possible when you already had a proven track of successful (and failed) enterprises. Others, on the contrary, think that VCs are always after another big thing and look for unconventional thinkers and fresh starters, ready to disrupt the industry with new bold ideas.
The truth is, however, different VCs tend to get attracted by different types of personalities.
Bob Goodman, General Partner of Bessemer Venture Partners, notes that it’s great to find a founder with a deep understanding of his target market, who has lived the same problems and now tries to solve them for others. Yet, it shouldn’t necessarily be a serial entrepreneur.
Gil Beyda, a VC at Genacast Ventures states that if a first-time entrepreneur has an innovative insight into a space or a problem, this gets him hooked up. Yet, if a serial entrepreneur walks in with some unconventional and even radical insights, he wouldn’t have any pre-justice either. Basically, he’s looking for someone, who can blow him away straight off the bat with their idea.
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