Now, put yourself in the shoes of an investor.
You’re staring at a pitch deck that promises to revolutionize dog walking or reinvent the coffee cup. The founders look sharp, the graphs point up, and your finger’s itching to write that check. But wait – let me share some war stories that might save you from the mistakes I’ve made.
Does Anyone Actually Need This?
Picture this: I’m sitting across from two bright-eyed founders showing off their “revolutionary” smart helmet for urban cyclists. Sleek design? Check. Cool tech features? You bet. But here’s the kicker – when I chatted with actual cyclists, they shrugged and said, “My $40 helmet works fine.”
Talk is cheap, but customer pain is real. I’ve learned to ask: Is this solving a headache that keeps people up at night, or is it just a fancy band-aid for a paper cut? Take food delivery during lockdowns – that was a real pain point. A prettier to-do list app? Not so much.
Founders: Are They Built to Weather Storms?
Here’s a story that changed how I look at founders. This fintech startup had everything on paper – Harvard grads, slick presentation, the works. But what caught my attention? One founder opened up about their previous startup crash-and-burn. They didn’t sugar-coat it. Instead, they laid out how that failure shaped their approach to building their new company.
Want to see real grit? Check out this food delivery outfit I worked with. They started in corporate catering, bombed, switched to meal subscriptions, bombed again. But on their third pivot? They struck gold with local artisanal groceries. That’s the kind of persistence that turns a maybe into a definitely.
Market Size: Are You Swimming Against the Tide?
A buddy once asked me to check out his investment in software for independent bookstores. Great team, solid product, but man – talk about pushing a boulder uphill. The market was shrinking faster than my patience in LA traffic.
Flip the script to this telemedicine startup I spotted right as COVID hit. Right place, right time, riding a wave that was already building. Smart move, right? But here’s the thing – don’t mistake a rising tide for swimming skills.
Pro tip: When founders say they have no competition, my BS detector goes off like a fire alarm. Everyone’s got competition, even if it’s just people sticking with their old ways.
Show Me the Money (And How Fast It’s Burning)
You don’t need an MBA to spot financial red flags. Take this electric scooter company I looked at – revenue was shooting up like a rocket, but they were burning cash faster than a Tesla on ludicrous mode. Their burn rate made a bonfire look efficient.
But then there’s this scrappy team I backed – they treated investor cash like their own lunch money. Stretched every dollar, grew slowly but surely. Five years later? They’re still standing while their flashier competitors crashed and burned.
What’s the End Game?
Early in my investing journey, I backed this killer lifestyle app. Great product, solid growth, but no exit strategy. It was like building a ship with no destination in mind. Eventually, it just… faded away. Talk about a facepalm moment.
Quick reality check: Ask about the exit strategy upfront. Are they gunning for acquisition? IPO dreams? Or are they building a lifestyle business? Nothing wrong with any of these – unless you’re expecting something different.
A Tale from the Old Guard
Met this veteran angel investor at a conference – picture a modern-day Yoda in a Patagonia vest. He told me about this “doomed” startup he backed in 2012. Everyone thought he was nuts. The product? Clunky. The market? Tiny. But he saw something in their patent portfolio. Three years later, Google bought them for an eye-watering sum.
His words stuck with me: “Startup investing is like planting a garden in the dark. You think you’re planting tomatoes, but sometimes you get watermelons. And sometimes what looks like a weed turns out to be the prize-winning rose.”
Now, when I’m sizing up a startup, I take a breath and remember – it’s not just about checking boxes. It’s about seeing the whole picture, feeling the pulse of the market, and sometimes, trusting that little voice that says “this is different.” Just make sure that voice isn’t coming from your empty wallet!
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