I’ve written a lot about the importance of focus among start-up teams. This is a very closely held belief. Develop a hypothesis. Test the hypothesis. If proven, move forward and add gas. If disproven stop, take stock, and determine whether or not to gin up a new hypothesis or go home.
The same is true for investors. All the noise around crowdfunding, party deals and all-angel rounds changing the face of the venture industry doesn’t resonate with me. What it does say is that there is more seed stage capital available from a broader array of sources that will give more chances to more people to start companies. All I have to say is: Bravo!
But to be clear, I don’t perceive this as a threat to early stage venture for many reasons. As a venture investor who is comfortable with the way I and my partners do business, I am confident that teams which see the value in working with us will choose to work with us regardless of the other options out there. Also, more interesting businesses seeded by others provides us with additional data concerning product/market fit, adoption and engagement that can go into our decision-making and relationship-building process. Nothing scary here.
Also, I’ve found that many seed stage start-ups actually want a heavier-weight, more engaged lead investor than a more diffuse group of awesome investors but where no single investor has a deep commitment to the company’s success. I completely acknowledge that lots of start-ups don’t feel they want or need this at the seed stage, and that’s totally ok. But those often aren’t the start-ups that we’re investing in. It’s just not our game.
But the bottom line is that for us it isn’t necessarily about leading or following, small investment or larger check. It is much more about team fit and excitement for the mission. Because when there is great chemistry and trust between ourselves and our founder partners, the relationship tends to work itself out in ways that benefit both parties. We might want to buy up in the company, and the team is psyched to get us more involved and more economically aligned with them. And when this happens it is an incredibly exciting and fulfilling thing.
But the key message is: know what you’re about, forget about what other people are doing and be comfortable in your own skin. Successful venture investing is a long time scale business, and the results of investment decisions will stay with you for years. So be confident. Be comfortable. And by all means do not simply follow the pack because it’s popular. Make no mistake, it’s hard to stay strong against the trend when others seem really successful and are getting all the kudos. But don’t fall prey to this dynamic. Just play your game.