With having hundreds of meetings with entrepreneurs under my belt I’ve realized a single question that constantly enters my mind. This question has risen in importance to the point of becoming a huge red flag, and likely a deal killer, if the answer isn’t “Yes.” That question is: “Could I see myself going to work for the entrepreneur.”
You could argue that a VC does essentially go and work for the entrepreneurs they invest in and I am fine with that analogy, but this question goes a little deeper. Often investors, especially those who have been an entrepreneur, meet a company and the vision or problem being tackled immediately resonates with them. Being an entrepreneur and therefore accustomed to taking the reigns and driving action, they start to think of what they would do if they ran the company and their own vision begins to overtake that of the founder.
As a firm, we talk about this a lot. One of the questions we ask when evaluating an investment decision is if we are aligned with the vision and strategy of the entrepreneur. We have learned this the hard way. It is easy to get excited about the market opportunity, the investment syndicate, the early traction and many other things and forget that at the end of the day you are not going to be running the company. Ultimately, you are backing the entrepreneur.
This is why asking the question of whether you would enthusiastically work for the entrepreneur is a good test. So often, first-time entrepreneurs seek out investors who can take them to the promise land. Any entrepreneur who has raised money before knows that this seldom (ever?) happens. Investors can help out in many areas, but at the end of the day they are not going to make you successful lre4ujj. The largest contributor to startup success is maniacally knowing the customer and building something they want/need. Only the entrepreneur can lead this mission. It becomes an extension of who they are.
A lot of investing in very early-stage companies is built on conviction and belief. The same is true of the entrepreneurs who start companies. I love to meet entrepreneurs who are driven by conviction and belief. Starting a company is just the vehicle used to take action on these drivers. In following a leader, or working for one, we are driven by the same things – conviction and belief. This driven by a lot of things – credibility, reputation, experiences, data, etc. Asking myself if I would work for an entrepreneur is a good way to test if I really have conviction and believe in what they are doing.