How do potential investors decide whether an idea is worth investing on when they listen to a startup pitch?

As a later-seed investor, I have a different perspective than earlier seed investors.

I’ve generally already made a rough decision if I am interested before the pitch. Before I even meet you.

  • I’ve already read the deck — probably twice (so please send it, and send as many details in it as you can). Any deal I am truly interested in, I’ll consume every bit of material you send me before the first face-to-face meeting.
  • I’ve already taken a look at the early numbers (e.g., $10k in MRR, $50k MRR, $100k MRR) and the early customers. The more data, the better.
  • I’ve Google’d you and played with your marketing site, and product if I can. I’d already used Mixmax and Pipedrive well before I even met the CEOs in person. Why did Jason M. Lemkin invest in Pipedrive?
  • I’ve already decided if roughly, you are having an easier time of it than I did at a similar stage as a SaaS CEO.
  • I’ve also already decided if I believe it could be big. (It’s fine if no one else believes it.) I knew, for example, Algolia would be huge. Even if the TAM was only $2m in 2014 when I invested. I knew. Algolia: From Impossible to Inevitable | SaaStr

So for me, the pitch is just now a chance to see if I believe in the CEO. Can she take it all the way to $100m+ ARR? At least potentially? Most importantly — is she a better CEO than I was, adjusted for time?

If I believe in the CEO in the pitch, I usually am about ready to invest 20 minutes in.

I know by then. Because I’ve already taken the steps above first.

In fact, with a bunch of my investments, we didn’t even do the pitch at all — Talkdesk, Mixmax, Automile, Salesloft, RevenueCat. I already knew these things without the pitch.

(And if we’ve already met before then, but timing wasn’t right then for whatever reason? Then I’ll know once you send me the update deck. That day. Then we can just shake hands on a deal right after that. E.g., Logikcull, Gorgias.io)

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Published on December 10, 2018

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