My recent post, Why Your Startup is Going to Fail, took aim at entrepreneurs. Raising money for a new business and then building out a lasting enterprise is extremely hard. The gruelling entrepreneurial process is like a marathon that you sprint — requiring the most in terms of endurance and speed from business professionals.
As it’s New Years Day, I thought it would only be fair to turn the tables a bit — to focus on how hard it is to be an investor in startups (crocodile tears, right?). Of course, it’s a different type of hard than being a business builder but arguably just as hard to get “right”. As investors, we face pressures to satisfy our own investors, achieve outperformance, building quality businesses and perhaps hardest, seeing companies that aren’t going to make it die.
As equity crowdfunding platforms scale and enable more people to become angel investors, the focus on successful investing is as important as ever.
So, cutting to the chase, here are my New Years resolutions:
I’ll do my best NOT to be a copycat: People complain that investors in startups tend to copycat one another. It’s definitely easier to ride the coattails of a winning idea than to find a gem on your own. That’s why there’s so much me-too in the industry. Hey, remember all the Groupon lookalikes (NASDAQ: GRPN)? Visionary investors have to have the wherewithall and fortitude to stand up to their own investors and peers to do something different. To do something in a way that causes some dissonance with how people do things today. I want to be that type of investor.
Focus on solving real-world problems, not produce sexy tech: Ashton Kutcher, for all his success investing in startups, has a simple philosophy: he focuses on new businesses that solve real world problems. As an investor, it’s easy to get swayed by MIT PhDs (in our case, Technion PhDs) touting earth-shattering new tech. Lost in our deal flow process are simple businesses addressing issues that many of us face everyday.
To be more accepting of people who are “different”: This is a goal I have in my life in general, not just via my investing focus. But legendary investors like Tom Perkins and Don Valentine said it well in their recent interview, but changing the world requires people willing to challenge the status quo. That requires something “different” and frequently requires someone different. I want to invest in more people NOT like me. I want to invest in people who didn’t go to Harvard, who found a different way to approach business, with different tactics, different ideas and goals, but who are solid enough in themselves to make a real difference.
Be a better listener: There’s an interesting power differential in pitching an investor. Talented entrepreneurs and salespeople can use this to their advantage but how frequently do we find ourselves telling others why their ideas aren’t going to make it? How often do we show off our experience and knowledge by knocking down good ideas? I want to be the type of startup investor who can listen attentively and know when to be quiet. At least, Prophecy Sciences says that’s a common quality among successful investors. I’m working more on listening.
Improve as a person: Startup investing isn’t a zero-sum game: no one has to lose for all of us to win. I want to work with our portfolio companies to make them as successful as we know they can all be. I want to do it purely, because I want to, because it’s challenging, because by doing so, everyone wins (even our competitors in the industry). I aspire to be a Go-Giver, a builder of wealth for many, a connector, a person who gives to give and doesn’t expect anything in return.
Well, there’s my soul on paper. That wasn’t so hard.
So, are you an investor or entrepreneur? What are you working on this year? Let me know in the comments.
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