A note about first investment meetings

Koa Labs
KoaLabs
Published in
6 min readMar 10, 2021

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As active angel investors at Koa, we take a lot of pitch meetings with founders. There are tons of great resources on how to give a good pitch, even at the earliest stages of a company, but individual investors are idiosyncratic, and some techniques that work with some investors don’t work well with others. We firmly believe that each side should be looking to maximize the return on the investment of their precious time. The key KPIs that matter for founders are time to decision, and dollars invested per hour of interaction. We strongly believe that good investors should give a yes/no very fast (within a a day is ideal but probably a week in most cases) to founders- there is very little benefit for deep due diligence, especially at the earliest stages when most numbers on the slide deck are pure conjecture anyway.

To that last point — in the seed and pre-seed stage of a company, nearly everything is based on common sense and instinct — the numbers and projections are essentially made up, and 99.99% of companies are going to look 100% different within three months — let alone 5 years. So these early interactions are really about understanding the motivation of the founders, technical approach and sophistication of the principles driving the tech or execution , general size of the opportunity, the approach to the market, and the capabilities, problem solving skills and raw determination of the founders. While normal investors are looking for a reason to say no, founder focused angels like Koa might be looking to say yes and we believe that an informal, peer to peer, informal conversation is the best way for us to get to a yes.

Our core investment thesis is to invest in first time entrepreneurs with technical or scientific backgrounds. Koa is also committed to investing 80%+ of our funds in women, immigrant and BIPOC founders. We tend to interact with many first time entrepreneurs, who have had far fewer pitch meetings than angel investors like us. There are lots of guides on how to run pitch meetings with VCs, but earlier stage investors tend to be more informal and idiosyncratic, and we thought it was well past time to provide a guide to working with us @ Koa in the context of an investment meeting.

For us at least, here is a guideline for how to optimize our initial interaction::

Conversations, not transactions

We work very informally (most of our days are spent at Henrietta’s Table in Harvard Square — reference here), and our settings mirror how we prefer to work — which is to say informally and conversationally. While decks can be useful, it’s always best to send them in advance and use them as a reference for a discussion when we meet in person. We’d rather get into personal motivation, technology, product and people through conversations, where we can pull out details about the potential business model, projections, funding structures, etc, naturally. If we’ve scheduled a meeting, you’re going to have our time and interest; in contrast to the first few minutes you’d have to capture a VC’s interest with a pitch deck. Speaking of decks…

Demos, not decks

While my own coding skills were never as good as the computer scientists and software engineers that I like to hang out with, I’m a computer science fanatic, software engineer and biopharma enthusiast at my core, and I always want to see technology, even in its earliest stages, rather than slideware. We’ve noticed that engineer/science oriented entrepreneurs tend to focus on getting a prototype up and running, while business oriented entrepreneurs tend to focus on business models/market sizing through a deck. To me, an early, ugly demo signals that the entrepreneurs are more closely aligned to their product/customers mindsets (more missionary). I get the most satisfaction out of working with these types of entrepreneurs. Actual technology helps frame a conversation about the business context and opportunity. Both business and tech are important — but starting with tech usually frames early opportunities much more effectively for us.

Peer to peer

It’s very natural to feel a power imbalance when talking to investors, especially for first time, unfunded entrepreneurs. It can seem like folks with access to capital hold the keys to the success or failure of your business. They don’t. As you find out after getting funded, the hard work is building a real mission driven business, and raising capital is a necessary evil. There are plenty of amazing examples of boot strapped or underfunded founders who built their resilience, character and business despite extreme skepticism from investors. Most entrepreneurs have more leverage then they realize- while it may seem that the normal path for entrepreneurs is outside funding, many of the best new businesses start with companies that are bootstrapped or extremely capital efficient. We talk a lot about this at Founder Collective (see even more posts about capital efficiency here. In its worst form, outside capital can ruin companies. As my partner Eric Paley posted a few years ago, When Venture Capital becomes Vanity Capital. The macroeconomic environment for early stage investment will ebb and flow — individual entrepreneurs don’t really influence it. We truly believe the best investors invest aggressively when general economic conditions are challenging, but always remember that you are in control of the destiny of your start-up. I prefer a peer to peer conversation with founders — we’re talking about technology, businesses and funding together. You’re neither a supplicant, nor a didact — nor are we.

Core content

We have a limited time together, so the more time spent on core content, the better. In particular, minimize time on introductions. If someone on the team has deep qualifications or special qualifications, highlight them briefly. Backgrounds and common connections will come out during a conversation. Bios are something that you can pass along in advance, and we always take a look before agreeing to a meeting. Hopefully you’ve done a bit of research too. In short — don’t spend time talking about your background/experience unless asked.

More than just capital

I bet if they were polled, most of the founders we back will say that while our relatively small investments were helpful at their earliest stages; the value of our network and experience as an entrepreneurs/operators did as much or more to help their companies. We very rarely invest alone, so we almost always are willing to help introduce entrepreneurs to our colleagues in the angel community and partners at affiliate funds. In computer science, technology and life sciences, we have a wide and deep range of colleagues we can call on to help your company develop and grow. If you do your research, and know there is someone we know that can be helpful, or have a profile in mind of folks worth talking to, make those asks in addition to raising up your funding needs. As my friend Christopher Ahlberg always says about how he manages his BOD, advisors and investors “Put them to work!”

A brief note about “No”

The reality is that the amount of capital we invest in start-ups is relatively limited — ($150K on average), and we want to deploy that capital in the companies that we believe are most exciting to work with. Most investors hate saying no — they’ll be evasive or send you what my partner Mike Stonebraker calls a “rock fetch” — a time wasting exercise that delays them having to say no and often sets you up for failure through a never ending time loop of follow up requests. Investors might not want to invest, or might want to wait and see, but they don’t want to burn any bridges and often are not valuing your time appropriately. In reality, an honest and rapid disclosure on their funding decision position is the most helpful thing a potential investor can do for you. Be sure to ask directly if you’re unsure of where we stand. This can feel uncomfortable, but if the outcome is a no, then it’s better to avoid any wasted time. We closely track our anti-portfolio (companies we passed on investing in), and you can rest assured that we’re both rooting for your success and that each anti-portfolio company that takes off makes us closely question our skills as investors.

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Koa Labs
KoaLabs

Located in the heart of Harvard Square, Koa Labs is a Seed Fund for promising start-ups. http://koalabs.com