5 Things An Investor Looks For In Any Startup
A song from Disney film Frozen is blaring in the background. Vinnie Lauria and I are speaking about the nuts and bolts of the investment, and his four-year old daughter Elsa has decided to join the conversation. His gentle tones and humour-filled asides to her belie the fact that this is a man with the power to make or break dozens of companies.
In its work with 25 startups across seven countries, Golden Gate Ventures has helped propel its portfolio companies to new levels—even unicorn status. This is not a fund you want to be turned down by.
Lauria clearly spends a lot of time making the decision about whether to take a relationship further. “For me, the number one part of my job is spending a lot of time with the CEOs,” he says, over Elsa’s dulcet tones. “I always ask about background, and why they are doing this: I always spend about half an hour on that topic alone. Mostly I want to know makes you make you unique—I try to get to the heart of that—and then work out if they have a longer-term drive.
Here's what Lauria considers when weighing up whether to invest or pass on an opportunity.
1/5 A Good Partnership
Lauria likes companies that have more than one founder: ideally one “geeky tech founder” and one business-savvy whizz-kid. “To me that’s a really great pairing,” he says. “In a perfect world, you’d add someone really creative as well, as that adds real magic. But mostly you need someone a little crazy and techy, who sees opportunities before their times, and a classic entrepreneur. Often I find the people who come up with the incredible ideas are like artists—they need another person to buy into their idea and make it a business. As a financial investor, I need to know that there is someone else willing to go on their journey with them. I’m not wild about having an old-school CEO who makes all the decisions; I like partnerships and businesses that are dynamic and progressive.”
See also: 5 Tips For Finding The Right Co-Founder
2/5 The Ability To Call It Like It Is
Lauria needs to know that he can have a working relationship with the startup founders—and especially that he can talk straight to them, without causing problems. “The reality is you have a mix of nerds," he says with a chuckle. "Some are very aggressive and others are much nicer, and I’m looking to see which ones these guys are. It’s not to say one is better than the other—but sometimes when you have a very aggressive entrepreneur, you need to form a bond of trust: you're fine so long as they respect what I know, and I respect what they know. Then we can have meaningful dialogue. But one thing is sure—if we can’t form that bond, and if they don’t see us as value-add, then it’s not going to work."
When you have a very aggressive entrepreneur, you need to form a bond of trust
“One thing I really value as an American in a different part of the world—with partners in Asia, the US, and Europe—is diversity. In my company, out of 18 people, we have eight different passports, and I love that because I believe diversity is innovation. When it comes to our startups, 51 percent have a foreign backer. As a fund, when we do investments, we look for diverse teams—it’s not a requirement, but we do like it. Other funds in Southeast Asia will often only invest in one or two international startups, but we look at everything. One of the things we are really trying to improve is the number of companies with female founders: so much so that we now have a fast-track programme allowing women-led startups to pitch directly to the investment team. We're doing everything we can to try to promote women as we believe more female-led companies will bring a different element not only to the fund, but the way business works.”
See also: 5 Questions Founders Overlook When Pitching Their Startup
When you're applying for a job, you look into the company; hoping for VC funding is no different. “It definitely makes them more appealing if they know the fund well—for sure," says Lauria. "If they do their homework on us, then we know that they’re invested in us. I like it when someone has checked the size of other companies on the portfolio. Ideally, they will have looked at sales for other startups on our books, or even have spoken to other founders on the portfolio: they can easily reach out to founders, talk to them, and get an idea of what we’re like. Not all VCs are good VCs, and they should do their homework before they come to us. For their sake as well as ours.”
See also: How Playing Poker Can Make You A Better Entrepreneur
5/5 Commitment—No Matter Your Stage In Life
You often hear people pontificating on the subject about whether it's better to be single, as you can take more risks, or to have children, as you know how to prioritise. Lauria believes anything goes. “I have three kids now, but when we had our first, we were just getting the company off the ground,” he explains. “For anyone who is grappling with that, and wondering how they're going to manage: I remember being really scared, and ended up having to seriously reprioritise my time. Before I just said yes to everything (you should always do that when you’re young) but now we have kids, I really try to be a part of their lives, and that means saying no more often. What I'm trying to say, is that wherever you are in your personal life, use it as an asset. If you've got young kids, it’s really not impossible to launch something big. I found I was way more focused."
See other honourees from the Finance & Venture Capital category of the Gen.T List 2019.