The VC Voodoo Formula
|Sep 14, 2016|
Both Entrepreneurs and Investors are living by this rule. The two perspectives are completely different and can’t decently be compared. But hopefully this one-sided view will remain helpful for entrepreneurs to understand what’s going on in the biased mind of an investor when the set of information is limited, incomplete and uncertain. Always.
First Things First
The investor’s mission is to forge an unreasonable conviction about a team and the high potentiality of the future that lies before them. And you can’t just look at the sky or scroll down your twitter feed and wait for a sign…
Team as a Filter
One can build compelling arguments to defend theories, opinions, analyses about a product, a market, an opportunity and all sort of things but we all know that a long term sustainable play is only possible thanks to the hard work, talent and vision of the most invariable asset of a company: its founders. And only them are responsible for increasing the value of this asset by recruiting and empowering incredible people around them. That’s why one invests in people first. Then…
Narrow & Focus
As an investor, one must deal with a lot of uncertainty… the team, their ability to grow alongside their company, the stage, the competitive landscape and how it’s going to evolve, the business model…
Uncertainty in venture capital is a set of known constraints that one is seeking to master within a narrowed chosen environment: investment thesis, sector, profiles of entrepreneurs. You pick your battles and forge a consistent approach toward a — kind of — specific target you can actually hit.
Throughout the Journey
Even though a lot of uncertainty remains, you believe you have picked the best team to achieve the impossible. The investment is closed and the real journey is now starting.
It is both exciting and challenging but moreover it requires to put a lot of faith and effort into helping and supporting the founders, especially in the struggle and in moments of doubt.
Success comes, with good timing and depending on the market conditions, throughout hard work, talent and luck but also thanks to a fair dose of auto-prophecy allowed by capital and network effects. Those last two factors are where investors have a great part to play.
I have highly supported Captain Train since 2011. I’m rightfully defending the talent of Damien Morin at Save and his current execution that is beyond everyone’s expectations. Everybody knows how bullish I am about Zenly since may 2015, in my opinion a $10B+ company in the making. And even though I am not rushing into this, you should hear me talk a lot about Sourced pretty soon.
And the VC Voodoo Formula: Team, applied to Thesis, compound with Capital & Network Effects, subject to Timing & Market Conditions
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