No Brainers and Big Thinkers.
The structure to search for great founders.
I want to articulate the way I think about investment opportunities. I think it’s something that is poorly explained from the position of an early stage investor, so I’m going to do my best to define my mental model.
To begin, Venture capital is the asset class of human endeavor. Or it used to be, and Boost VC is bringing that back along with the other Deep Tech investors.
Human Endeavor is the energy that powers the world forward. Human endeavor is what creates social and technical change in order to make humans live better/longer. The Venture market now calls this Deep Tech… and we are thankful for the term.
When making investment decisions at the earliest stages of startups — I’ve learned there are two types of decisions: No Brainers, and Big Thinkers.
No Brainer decisions are when you talk to someone for the first time, and it doesn’t matter if they are selling hot dogs, hand grenades, or software, you identify a specialness about them that is undervalued by the market. That specialness is magic. When you see magic, you invest. When you run into these founders, you say yes as fast as possible and spend as little time on rationalizing it as possible —— Nothing kills deals like more time and more data.
The second type of decision is Big Thinkers. Big Thinker decisions are where we spend the most time, and we should.
Is this important?
Can this team execute?
Does it fit our business model?
These 3 filters will be defined differently by every investor. I think “Important” is largely over-looked as a filter. We need founders attempting ambitious world change in order to make it happen.
I think the focus of VC is super easy. The market of other VCs choose a popular concept to focus on and invest in… The best opportunities are somewhere else. The “Current thing” of today is AI. It’s incredibly important, but it’s also saturated with “Tourist Founders”, and Venture Capital becomes less valuable and too competitive in those situations.
I’m competitive, but hate competition when it comes to deals, so I look elsewhere.
An investment could be a good investment and not be important.
Or it could be important and not be a good investment based on the firms business model. (Many funds are learning this one the hard way from 2021-22 investments)
Venture requires a certain level of discipline in good times and bad.
My math has always been “If this becomes a $1B company, does this impact or return my fund.” Super basic, but at the end of the day that’s what matters for endurance in Venture Capital. Return your partners capital again and again.
This was fun to write out. Ill probably keep this as a living document to update and send to my team when people ask these questions of me.
This was such an amazing read and validated by thesis that you surely are the first person I would want investing in what my team and I are building at AETTHER.
Whether it be $5, or $Trillion, I definitely want you on my team as well!
The time for AI + AR + IOT is NOW!, I call it AIRT for Artistic community engagements that bridge the online to onsite experiences through an ART remix engine and IOT Token Network. This has been 14 years in the making, as it required a new but familair token network built on top of Aeternity (NFT + IOT Oracles), Bitcoin (IOT Currency), and Coinbase (IOT DEX) ... Also, its no suprise Aeternity has AI and AR in it, while Bitcoin has IOT in it!
Let's get it. Sending lightweight pitch deck right away!
Interesting article, although I’m not sure I agree with the ‘no brainer’ part.
While “Nothing kills deals like more time and more data” is certainly true, it’s also not necessarily a bad thing. Because there’s already a long list of investment frauds and managed failures where the only people making bank were the founder(s), all made possible because investors had such ‘no brainer’ moments and forewent all due diligence based on the supposed “investable-ness” of the founders. When it turned out that their “specialness” was really just their ability to sell their investors down a river. And those aren’t exactly rare occurrences in the world of Venture Capital.
To me as founder, frankly any investor willing to invest solely based on my personality and irrespective of the merits of my actual ideas/business would raise a huge red flag and very likely would make me walk away. I do want to see my ideas and my concepts to undergo at least some scrutiny, because it shows me that the person who might become my new business partner is taking this seriously, and at least tries to understand the details of the business they might soon own a share of. It also shows me whether this prospective business partner truly understands my sectors (DeepTech/DefTech/Aerospace) and the specific challenges it poses to startups like mine (it’s absolutely staggering how many don’t).
At the end of the day, accepting an investment isn’t just taking a check, it’s most of all entering a long-term business relationship with someone who’ll own a share of my business (the check is merely the facilitator). Both sides have to be confident they can work together productively, and that’s not possible without at least some level of scrutiny from both sides (I wouldn't enter into a deal without scrutinizing the prospective partner) . Without this, it’s really just a waste of everyone’s time.