2 frames for investors to see opportunities that others will miss

It is common for investors to filter for risk when assessing an opportunity.

Startups are abundant with risk and it is easy to find. The younger the company, the more the risk oozes from the pitch. The deeper the tech, the more difficult to see how we get to the 10x return.

The sheer weight of risk can crush an opportunity, leaving a ‘NO’ as the only possible way forward for an investor.

I like to start at NO and claw my way up to the YES with the founders. We may not get there together. But we might and, in doing so, we may discover a powerful partnership that others will miss.

There is no perfect company to invest in.

We are hunting for the value together. Prospecting.

Here are some questions I ask myself during conversations with founders.

What if they are right?

The default position in a founder conversation with an investor is “What if they are wrong?”

Founders come armed with a series of assertions and proof about how they can change the world with their company. It is easy to chip away at these and position blocks in their path.

I like to explore what the world might look like if their hypothesis is correct.

What do they understand that I do not?

How can we make this stronger? What stories can I tell that will give them more evidence?

What are their strengths?

Ben Horowitz at a16z talks about a belief in strength over a lack of weakness.

I like to look for what this company has that no one else has?

Often the weaknesses in a company can be addressed simply through collaboration and time.

The strength on the other hand is hard for others to reproduce.

I write a lot about deep tech investing. Here’s something I wrote recently about the investors role in a founder pitch. If you find this helpful, I hope you will follow me on Twitter.

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Phil Morle

Phil Morle

Deep tech VC — Main Sequence Ventures. Ecosystem builder. Maker. Director. Startup Scientist.