About a month ago, I wrote a post about how the Bay Area seed ecosystem is generating deal flow levels that are nearly impossible to keep up with. In the post, titled “Seed Deal Flow Tsunami And The Quick Kill,” I attempted to explain how, in the face of the deal flow firehose, I get to a quick “no” which I hope is helpful for both sides.
Now, I want to write about a slightly touchier topic: What actually gets my attention?
To set the context, all new inbound deal flow comes to me via text message (20%) or email (80%). In no particular order, here are the ingredients that push me toward the feeling “Yes, I’d like to meet!” Note, these are in no particular order, and the more ingredients that are presented to me upfront, the faster I want to meet:
-A strong, brief, but detailed introduction from someone I know well, such as a close investor friend, founder in my portfolio, or someone I’ve worked with. (Note, this actually means that the person pinging me has taken the time to write even just 2-3 sentences about “why” this is an interesting person to meet.)
-A strong reference from an investor who has already invested. (Someone who has already invested and is willing to risk his/her reputation in sharing a deal clears a high threshold. Less common, but still valuable, is when an investor passes on an opportunity — for stage, or sector — but truly loves the founders and wants to share with others to help.)
-An authentic connection between the CEO and/or founding team and the task at hand. Whether it’s right or not, my investment pattern has been to find founders where I can see a line of sight looking back from their current work to previous experiences, whether those are work-related or not. (These traits often manifest themselves in deeper insights in the pitch itself and the ability to argue the opportunities and challenges they may face from a variety of angles.)
-Evidence of resourcefulness in the founders. There’s a lot of money out there. I’m trying to make a quick mental calculation about how much the team has done already with the money they’ve raised to date (even if it’s just their own time and money), bound by time.
-A crisp investment pitch deck in PDF format that clearly demonstrates the team’s ability to communicate & present information in a compelling manner. (I will tackle this in more detail in a separate post, but for now, I am judging how someone shares information with me as a proxy for how they will share information with a potential customer they’re courting.)
-If I don’t have a connection to the team, a cold email that’s brief, personalized, and written in an authentic way that’s meant to build a relationship. (I simply do not have the time anymore to answer cold emails, let alone process them. I know people will say that’s unfair, but I do think part of the game is to get people to advocate for you. Even I have to do that in my work. It is what it is. That said, cold emails done well can and do work.)
If a deal comes across my desk that has even just one of those things, I do pay attention. One or more, and I start to pay more attention. If I look back on the investment decisions I’ve made, most of these ingredients are presented to me before I even had met those specific founders. Perhaps you can say I’m looking for signals in the deal flow that matter to me specifically, that are hard to fake. People are smart and certain signals can be manufactured — it could be massaging metrics, or placing big logos around a person or business. I do not proclaim to make correct decisions all the time nor to catch every great thing. I will miss things.
I know some will read this and bark it’s unfair, but in a noisy world, I need signals to guide the way. These are the signals that matter to me. This is the process that has worked for me to date, and it leads to me working with a type of founder I want to partner with. That is the ultimate goal and what I’m saving my limited attention for.