What I’ve Learned: Week 5
Breaking Up Faster
You know when you’ve been dating that special someone for a while? Then, seemingly out of nowhere, that horrible, slow-motion train wreck moment of breaking up starts to happen. Maybe you hear:
“It’s not you. It’s me.” Or, “You’ve got a great personality.”
Well, let me be blunt. The relationship you’re trying to build with a VC in the hopes of getting an investment doesn’t have a chance.
It’s not you.* And actually, it’s not me either.
It’s your startup.
And it isn’t your LTV, your CAC, your CAGR, your DAU’s, your MRR, or your [insert industry-speak metric here].
It might seem simple, but I’m still surprised by how frequently both real entrepreneurs and wannabe entrepreneurs don’t realize that not every startup fits the venture capital model. I should be getting used to it, I guess, but I saw this misunderstanding repeat itself over and over this summer at JME Venture Capital in our unsolicited deal flow.
Two of my IESE Business School professors, Rob Johnson and Luis Martin Cabiedes, (who I’m also thankful to have received multiple VC coaching sessions from) have mentioned simple evaluative frameworks that would be helpful for both VC’s and startups to consider. In fact, I’m pretty sure that Rob was the following framework’s originator.
Does the presented investment opportunity have:
- Viability (Market - clear and identifiable, Competitive advantage, etc.)
- Feasibility (Team, Timing, etc.)
- Investability (Scalability, Exit, etc.)
Yes, there is more to VC investing than this little tool, but it’s a starting point, along with a few others I’ve linked to below.
What I learned then in Week 5 is that even though there is PLENTY of content out there for founders on what VC’s are looking for, you’re still going to get bombarded as a VC with opportunities that don’t make sense. Employing a simple litmus test is an easy way to stay disciplined and weed through the deal flow faster.
There are plenty of other frameworks, but I’m curious which one’s you have found useful? I’ll add them to the list.
- OUTSIDE IMPACTS
- Sequoia’s investment memo layout or their road map for business plans
- Management, Economics, and Control from Venture Deals
- Business Model Canvas adapted to VC’s perspective
*And, you really DO have a great personality.
You can also check out what JME Ventures “learned” from me, via “What We Learned from our Summer Associate” and what I learned in Week 1, Week 2, Week 3, and Week 4.
