Lesson:Entrepreneur Turned Angel Investor with Josh Felser

Step #3 It's a 10k: The traits of an investment-ready entrepreneur

The entrepreneurs that we gravitate towards the most are those that kind of listen because they know what they don't know. So, they want help. But they also will preach because they are passionate about the things they do know.

If you have had past success, we kind of break that down. It makes us feel comfortable, faster, once we understand why you were successful. Were you lucky? Was there real skill and strategy behind your success?

So, if we come out of that recognizing you were skilled and strategic in how you approached the world, we put you in a bucket and that whole process is much easier.

Most entrepreneurs that we invest in are first-time entrepreneurs. We just… so, that's a different decision making process. We look for a passion in the idea that they have because when things are gray, if you're not passionate, you're likely to bow out. That's a hard thing to assess.

If you're starting a company and you're still working at another job and you're waiting for the funding to happen, we won't fund you. We have a set of filters and that's in our list of filters we look for. So, we want to, first, we want to feel like you're passionate about it.

The second thing we look for is how passionate we are about it. So, it's kind of a match. When we have a match, then we go to the next step, which is understanding whether this entrepreneur scales. So, do they have the hutzpah to rally the world to their cause? That's a hard thing to assess, but we really try to.

Part of it is we imagine whether we would start a company with this person. So, we look for this magnetism that helps them with recruiting, with working with other companies. It helps them motivate the entire company.

We want entrepreneurs to basically kind of put their lives on hold for at least, you know, the next couple of years. It's not a sprint. It's not a marathon. It's kind of a 10k. So, we want them to think about it that way.

If they think about it as a sprint, they can burn out. If they think about it as a marathon, they can move too slowly. So, we kind of think of it as a 10k. We recognize that that kind of pace, you cab kind of keep that pace for two years.

We look for somebody who can really handle the stress and the demands of being an entrepreneur and run at that 10k pace for a few years.

The ideas are easy to assess. It's the entrepreneurs that are harder to assess. We can kind of get to the bottom of an idea pretty quickly. But usually you have three meetings to kind of get to know or decide whether this person is someone you want to be with for the next three, four or five years. It's an art.

We do a lot of background checks. We do backdoor checks, less the references they give us. There's someone that we are close to that likely knows that person better and over a longer period of time than we will ever pick up in the short courting experience that goes on. It's also more complicated.

Our preference is to invest in two or three cofounders, but at least two. So, then when that happens, we kind of look for different things in each cofounder.

It's okay if one of them is kind of a geeky, introverted kind of cofounder and the other one is the more external. I think that's fine. In our list of filters that we look at when we evaluate entrepreneurs, one of them, we'd like one of the entrepreneurs to be more extroverted, one more introverted.

If they're both extroverted, that's fine. But one needs to be the kind of… you can't put a price on hutzpah. I think we look at it very specifically. I think that a lot of investors, maybe they feel it. They don't target it specifically. We look for that in entrepreneurs that we back.

You can find lots of ways. It's a mix of relentlessness, leadership, salesmanship, humor, authenticity. It's a mix of a bunch of things that we look for, but it's not arrogance.