What We Say When You Leave the Room

The first thing my founder friends asked me when I started sitting at the other side of the investment table was: “What do they think of us?” and “What do you talk about when we leave?”

It’s a question that I’ve gotten repeatedly, and one that I’ve answered with varying levels of honesty over the past few years. When I was pitching I always imagined the conference room after a pitch was akin to the gossip-filled teacher’s lounge at an elementary school. After a few cycles of AlphaLab Gear and AlphaLab interviews, plus judging a few of pitch competitions with founders/angels/VCs I can say that’s not entirely true.

It of course varies with each company, but there are a lot of things we almost always discuss after a pitch:

1) How well do they understand the problem?

This one is big. We have a definite bias for founders that come from industry, who have dealt with a problem for multiple years before finally becoming fed up and solving it themselves. They are laser-focused and know what they are trying to achieve.

2) Great team, impressive technology, horrible business idea. What can they pivot to?

Most of our founders are engineers. A lot of what we do is help companies expand their vision and look at other markets / opportunities. We generally test the waters during the pitch to see how open teams are to changing / expanding their idea. Probably only 1/3 of our teams leave AlphaLab Gear with the exact same idea they came in with.

3) Can they actually build it? (How large is their technical risk?)

We take early-stage teams with really big ideas. That often means taking a lot of risk on both the market and technical sides. We can help with the market, that’s what we’re good at. But the teams needs to have the credentials to build the product themselves. We spend a lot of time discussing if we think they can do this, and often bring in outside experts to help us make this call.

4) Are they full of themselves?

It takes a certain amount of ego to succeed in startups. You have to believe that you will succeed when 95–99% of founders fail. However if you’re too full of yourself you will be blind to problems that arise. (i.e. you don’t know what you don’t know). This kills many many teams and it’s a giant red flag for us.

5) How much grit do they have?

This is probably what we spend the most time discussing, because over every other variable it’s probably the highest predictor of success. Grit is one of those words that means different things to different people. My equation for grit is below:

I’ve also heard it described as “How bad do they want to make f*** you money.” I think that’s a bit overly simplistic, but it does convey a certain level of gravitas that might be missing from my equation.

6) Were they defensive? (Are they coachable?)

Like I’ve said in previous posts, early-stage investors invest in people. Not companies. If you can’t make it through a 30 minute interview without an exasperated sigh, harsh tone, or visible sign of frustration in your body language (clenching hands, excessive pointing, rubbing forehead, frowning, etc.) you probably won’t get investment.

What we’re looking for is signs that you’re coachable, i.e. you can listen to feedback, understand the context in which it arises, ask thoughtful follow up questions, and then factor and weight these data points in your decision-making processes.

Your level of coachability determines how many mentors, advisors, and investors want to work with you, and the amount of effort they extend when helping you. It’s a critical factor for success.

Startups and investment

Posts from experts at Innovation Works.

Chris Millard

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Husband | Father | COO @interphasemat | co-founder http://hanoverdesigns.com

Startups and investment

Posts from experts at Innovation Works.