Early stage investing: preseed or seed series investments. These are investments usually done with either no product or no traction.
Early stage investing is purely personal.
Startups are all about outliers. People who hold different or controversial ideas. Not necessarily just for the sake of holding controversial ideas but even sometimes that helps to get more curious about the world.
A rule of thumb we push at Troy Labs is bold ideas, weakly held. This means that we should discuss and come up with controversial and interesting things yet always weak enough held, not to waste time in the face of an objective truth.
Inevitably this rule extends itself to the world of venture capital. You can see thousands of VCs repeating the same words over and over at Linkedin or their websites:
We back great entrepreneurs with bold ideas to change the world etc…
This sentence is meant to invoke the meaning that the founders VCs come to back are very controversial and interesting personas. I cannot comment on that.
What I can comment on is their resume:
Despite the claim that VCs back bold ideas, weirdos and non-conformists, the people who are able to close a preseed or a seed funding usually are those who come from very conforming places.
- 2 guys from Facebook, 1 product manager and 1 engineer
- working in San Francisco
- Stanford and Cambridge graduates
- 2 guys from Egypt or Greece
- Living in Europe
- Graduates from University of “Whocares”
Which one would you go with?
Let me guess: You did not even go with
both but instead you de-risked and went with the first option.
And why would you not? Facebook is a great company, SF is a great place, the guys are obviously much smarter than the average person.
All this, is not to say that this is a bad bet. We never can know or quantify that.