“4 Things I Need To See Before Making A VC Investment”, With Sean Brown
The millennial generation makes up the largest part of the workforce today. It’s only natural to see more millennial founders of startups than ever before. Sean Brown has 15 years of entrepreneurial experience and has built and sold many successful companies. His latest venture is GO VC, a venture capital firm that is trying to redefine what it means to fund startups. Sean wants to invest in entrepreneurs, as well as the ideas they have. Here are the 4 things Sean shared with me, that he needs to see before making a VC investment.
1. Growth-Minded, Not a “Know-It-All”
Millennial stereotypes traditionally involve someone who believes they know everything. Millennials are often painted as arrogant, and unfortunately, entrepreneurs from this generation can conform to that stereotype.
Sean looks for entrepreneurs who’re confident in their abilities. He wants to see entrepreneurs who’re focused on growth without believing they’re God’s gift to business.
For Sean, an entrepreneur admitting that they’re weak in a particular area is an advantage, rather than a disadvantage. Skills can be taught, but someone who believes they already know everything can’t be explained because they don’t think it’s necessary.
2. Committed to The Growth of One Idea
Sean goes beyond the traditional way of venture capitalism. It concentrates on making sure that businesses have what they need to survive for the next five years, rather than the next five weeks.
Early stage startup founders often lack this ability to gaze far into the future. But millennial founders who do have this ability are more likely to be successful.
Venture capitalists want to invest their money in businesses that are equipped to survive and thrive for many years to come, not in it for a quick buck. The better a company is prepared for this, the more they’re relying on skills and vision for the future instead of luck alone.
3. Passionate about your Product, Not the Entrepreneurial Lifestyle
After the 2008 financial crisis, entrepreneurship became “trendy.” More and more millennials moved into the entrepreneurship arena because they had no other option. It soon led to lots of images of a glamorous lifestyle; jet-setting, setting your own schedule, etc. These are great perks, but you can’t uphold the image that you are living large and running a successful business without actually putting in the work necessary to succeed.
Many millennials aren’t interested in the hard work or the commitment. They just want the lifestyle that comes with it, which isn’t a recipe for success.
Inevitably, it’s going to lead to a situation where they’re not going to succeed as their heart isn’t in it. Believe it or not, this matters in business.
Sean wants to see millennial entrepreneurs with a genuine passion for their product. It should be something they’re 100% committed to making a success.
There’s little point in investing in a product that the founder isn’t interested in.
4. Sustain Realistic Financial Projections
Watch any show based on entrepreneurs, such as Shark Tank or Dragon’s Den, and the most common complaint is that entrepreneurs have unrealistic numbers.
Whether it has to do with the valuation of their company or what they want to achieve, many millennial founders are just not living in the real world.
For an early stage startup, projections matter. Sean wants to see realism from the companies competing for his investment. It’s not essential to have the highest number possible. What’s important is whether or not that number is realistic.
It displays a critical aspect of a millennial entrepreneur’s character. Realistic numbers demonstrate that they can take honest, sober looks at their businesses. For entrepreneurs this is crucial.
Why the Venture Capitalist World is Changing
This is a trend that’s impacting the entire venture capitalist world. Investors are becoming more specific about whom they invest in and what they want to see from founders and their companies. It’s sure to make the playing field more competitive, but for those who do receive investment from innovative organizations, the chances of success are higher than they ever were.