Why Venture Capital Investors Are Usually Wrong About Startups

And the intangibles that will get you on the right side

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  • Your business doesn’t fit their investment thesis.
  • There’s only so much room in their portfolio.

Why investors make mistakes

According to basic VC math, investors have about a 1 in 10 success rate.

The company knows everything there is to know about their industry

One of the reasons older entrepreneurs have a better track record than younger entrepreneurs is that they’ve spent more time living with the pain of the problem they’re trying to solve. So usually investors look to check the industry experience box at a high level and score that startup based on its industry connections.

They know everything that’s going on within their company

If you ask anyone at my current startup, Precision Fermentation, how many fermentations were started last week using our technology, they will be able to tell you. If you ask them how much our marketing spend was last month and how many leads it produced, they might not remember, but they’ll know how to get that information.

They know everything that’s going on in their market

You know how to do a really good competitive analysis? Call the CEO of your primary competitor and spend an hour on the phone with her.

They focus on improving their product, culture, and mission

Investors like companies who are seen and who sell, and that’s usually where it stops. They like press, awareness building, brand building, and when the cash register rings.

I’m a multi-exit, multi-failure entrepreneur. Building Precision Fermentation & Teaching Startup. Former Spiffy & Automated Insights. More at joeprocopio.com

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