Every investment decision is different, so it is hard to precisely describe every possible scenario. Timelines can be highly variable. Different company stages can require more or less diligence. That said, almost all investment processes roughly follow the same shape.
- First meeting with the founding team and someone from our investing team. Typical 30-45 minutes.
- Second meeting with more of our team, and often experts from our community. Typically 60 minutes. Background diligence begins.
- Meeting with our full partnership. 60 minutes or more. Diligence continues.
- Yes/no decision on investment. Final diligence as needed.
We meet founders in many ways. It could be through our personal network, through an introduction by a mutual colleague, an event on a university campus, or even an unsolicited email or LinkedIn outreach. While the nature of our job doesn’t make it possible to respond to every single connection or message, if something about a founder’s background or materials that were shared along the way spark interest, we schedule an initial meeting with one of our investing team members.
In the first meeting, we are working to answer a handful of key questions, but first and foremost, we want to get to know the founding team.
- What is your origin story?
- What compelled you to start this business?
- Why are you the right people at the right time to build this company?
We also want to understand the market opportunities founders are solving for.
- Who is your target customer and how many of them are there?
- What problem do you plan to solve today and down the road?
- How are you planning on making money?
- If the founders are right, how big could this company become?
- What could go wrong? (Tech, competition, macro trends, etc.)
In subsequent meetings, we typically introduce a founder to more of our team, while digging deeper into the business itself. In the background, we are doing our own research, getting smarter about the market and opportunity, and developing questions for follow-up conversations. This is also where we begin to leverage our Community in the diligence process.
Much in the way that we do not expect a founder to be experts in every aspect of running a business, we are not experts in every possible domain either! In almost every case, we pull in experts from our Core Community to help in our investing process. This does three things:
- It helps us validate the problem, the opportunity, and to ask the right questions.
- It gives founders an opportunity to speak to someone that really understands their space, and in some cases is also a potential customer!
Somewhere after the first or second meeting, we will also generally ask founders for references. This includes both personal and professional references and where applicable, customers as well. This part of the diligence process often continues right up to the decision point. Finally, we may also conduct some level of financial and legal due diligence at our discretion. For early-stage startups with little revenue, this tends to be pretty light weight, but we generally like to understand a basic financial model and milestones and projections between the current and next financing.
This entire investing process usually takes 2-3 weeks, but after the final meeting with our entire partnership, we are generally ready to make a decision within the next 2-3 business days.
