Qubit: Scott Kupor on Evaluating Founders
Founders, two things to think about when pitching to VCs:
· How big could this (market size) be?
· What makes you think you can pull it off?
In other words, what's so special about you that you can create something incredibly valuable?
“I think there are two big takeaways that we try to make clear in the book. One is just that you’ve got to remember that a lot of what we invest in doesn’t materialize. We’re looking for a very small number of companies that can ultimately be very big winners. What that really leads you to is that market size becomes very important. So, the real question the VCs are asking at the early stage is, ‘Let’s just assume everything goes right. How big could this be?’ And there’s no magic answer to that.
That’s lesson No. 1 for entrepreneurs to think about. Lesson No. 2 is, at the early stage, there’s not a whole lot other than team for the VCs to evaluate. You’ve convinced them that market size is big. You’ve probably told them about what your product ideas are, but we know from experience that your product is going to change many times once you actually get into marketing and feedback from customers.
The one thing that probably doesn’t change is team, so a lot of our evaluation is not why invest in this category, but why invest in you as a team? What is it that makes you uniquely qualified versus any of the other teams that we might see doing the same idea that gives us confidence that you’re going to be responsive to the market, you’re going to know how to hire people and grow the business, attract employees and do all the things that will be required to generate success?”
Source:
What Entrepreneurs Need to Know About VCs
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