The hard thing about easy things
Ticking all the boxes
A few weeks ago I turned down an investment opportunity that seemed to tick all the boxes:
FinTech going after an interesting and growing niche market segment.
Good traction and growth every month since launch.
Two well-educated and complementary-skilled co-founders.
Investment and coaching from a highly regarded accelerator, which has had lots of previous success.
Follow-on funding from one of London’s top VC funds.
The thing is, as I was listening to one of the co-founders talk me through all their achievements I had a growing feeling that something wasn’t quite right. I didn’t know what that feeling was on the call and I felt a bit slow and stupid for not being able to ask a question about it while I had the co-founder in front of me on Zoom.
Despite feeling a bit daft at the time I knew that this founder wasn’t a Star Founder.
Strength through adversity
For me, Star Founders have to be able to show they have grit. Grit is the ability to persevere through adversity in the pursuit of very long-term goals. And there has to be clear evidence based on their past experiences — where and how they grew up, what previous jobs they’ve had, what they did for money aged 16, that kind of thing. It is only possible to be a ‘potential’ Star Founder if you already have a high degree of grit, but lack a bit of self-awareness.
So that’s what it was, I realised; I couldn’t see evidence of grit because they just hadn’t had it hard enough. Yes, getting a 1st class degree is hard, but talent or being smart doesn’t mean you have grit and working hard in a corporate job is just not the same as having to work two menial jobs to make pay rent. I realised that everything had gone nice and smoothly and I couldn’t categorically know that they had the grit to make the startup succeed.
It was a hard call to make. The founder I met may well go on to be an amazing success and it’s another that I’ll have lost out on. But that’s OK. By being an investor in startups I’ve had to accept from the start that not only might I miss out on investing in amazingly successful startups but that I definitely will miss out.
That’s why it’s important to have, and develop, an investment thesis of your own. Mine is looking for Star Founder as defined above and here. If you want to develop your own framework I’d encourage you to keep it simple, to think about what you absolutely won’t compromise on and then stick with that core while constantly refining around the edges. Then you’ll find and invest in the startups that are right for you.
In other news
Unplugged have launched "Unplugged for teams".
If you’re a CEO you can now you can give your team members a well deserved digital detox. The line that got me was, "Almost everything will work again if you unplug it for a few minutes, including you".
If you want to find out more or book in then reply to me or email firstname.lastname@example.org
Important: None of these posts are investment advice. If you are thinking about investing you should seek the advice of a suitably qualified independent advisor.