Recently on this blog, I’ve been attempting to unpack how an investor can sort through deal flow and potential investment opportunities. After writing about “the quick kill” to discard of inbound flow, next I wrote about what actually captures my attention and graduates to a meeting.
So, now, what happens in the actual meeting?
This is hard to explain, actually, because I can have a range of reactions to a meeting. I understand entrepreneurs would like to know the outcome of a decision at a meeting or soon thereafter — and sometimes that can happen — but sometimes it takes a while for things to take shape.
Immediate “Yes” – It is not common, but it is possible that I leave the meeting with all the information I need and, with some quick reflection, signal the founder that I’d like to invest. This can be as short as 24-48 hours.
Immediate “No” – This is very common. I will save the last minutes of our time in person and lay out why the current opportunity is not a fit for me. I am careful to acknowledge I may be getting this wrong, and like every other investor, I have plenty of incorrect calls. I do this in the meeting partly to stay present about having a proper close to the meeting, to give the founder a clear sense of what I’m thinking, and to stop the back-and-forth email that can occur after a meeting.
“Fascinating, I need to think about it…” – Being an early-stage investor, I do encounter amazing people building entirely new things I have not even conceived. I try to wake up each day with an open mind and so much of the job is reactive to meeting that one great founding team with a cool idea. Sometimes I’ll leave a meeting and say “Wow, I need to digest this.” Here, the onus is on me to re-engage with the founder and ask for their time. At times when I say this, the founder can be confused and still is waiting for a yes/no answer from me, when in reality, I don’t know where I sit with the idea.
“Fascinating, I’d like to meet again…” – Most of my investment decisions that get to “yes” follow this path. I’ll meet a team. The meeting is great. And, I’ll want to meet again within a week where both sides do some homework on each other. I find this to be a very collaborative and enjoyable experience, as it gives both sides a little time to diligence, to see how it is to work with someone else and builds some “deal momentum” relative to other things that are in the pipeline.
Workshopping An Idea – This is happening more frequently. I will meet a founder with great potential. But, it’s so early and they’re a first-time founder, and there’s not much there, and I don’t know them yet. But, I like them. There are some patterns to these meetings. There are no formal materials yet. They’re looking for investment but haven’t really figured out what they’d do with investment. Sometimes founders are just fundraising and don’t like this, and that’s fine for me — one less meeting. Sometimes they find it refreshing, and we get to know each other better, and hopefully, they find these sessions useful. Of course, should things progress in a manner that I like, I can always invest. Occasionally here, I’ll make a smaller investment to start and help syndicate.
Ultimately, I view my role in the ecosystem is to help those I meet with direct feedback. I cannot meet everyone, so I spend a lot of time filtering out “who” to meet. And, after seeing the deck and meeting a person, I work really hard to give my mind the time and space to come to a point of rest, where my subconscious can kick in and do its work. Too often in looking at a deck or hearing a live pitch, the analytical parts of our brains are firing — but the decision to invest so early is also heavily influenced by the potential entrepreneurial energy locked inside the protagonist. In evaluating a population that is mostly first-time founders, I need to understand the arc of their entire story and drill down to the core motivators. And for the markets these founders play in, I need time to let my brain run the various paths their creations could take. I do not proclaim to be perfect, and I have had my fair share of scheduling and transportation challenges that have frustrated a founder here and there, but I’d like to think overall I’m pretty direct about where I stand, including when I tell someone “I need the time and space to reflect on this.” That is my process in meetings and so far it has worked well for me.