How an Investor Thinks about Investing in Early-Stage CompaniesBack to home
This week I listened to another investor share her views on early-stage investing. At this stage, there isn’t much of a company. It’s just a few folks, an idea, and maybe a product or service. There likely aren’t customers, users, or meaningful quantitative data to inform the investment decision. She believes early-stage investment is about evaluating the following:
- Narrative – What series of events did the founders experience or observe that led them to a problem or unique insight that others don’t see?
- Story telling – How well do the founders communicate how they view the problem, how they want to solve it, and the impact their solution will have?
- Team – How strong is the team? Do they have what it takes to solve the problem? Do they have sustaining motivation and passion to weather the ups and downs of the journey to the solution?
I really like how this investor approaches evaluating early-stage investments. It’s simple and makes sense. Early-stage founders should consider these three points when they’re deciding whether to pursue a problem and when they’re pitching.