I admit it… When I make an investment, I know way less about the market, the opportunity and the challenges than the Founders do.. And that is fine by me. If I knew more than the Founders, then the Founders probably don’t know nearly enough to win.
The Founders vision is the oxygen of the start-up and it feeds the rest of the team, the customers and the investors. Regardless of the stage of the business, the Founders (and/or management) need to be the visionaries, not the investors. It’s not to say that the right investors won’t have a great positive impact on your vision, but the vision ultimately has to be shaped and driven by the Founders.
Before investing, sometimes I fall in the trap of trying to understand the vision too deeply and seek comfort through knowing everything. Sometimes I find myself trying to get a superior insight to the Founders so I can then look back from the future to make a judgement on their vision and their plans. Sometimes I fall in the trap of thinking that I can know more than the Founders.
In seed investing, I focus on working with the Founders pre-investment to question their understanding of the market, the opportunities and the challenges. I spend a lot of time hearing their life stories because I’m ultimately making a judgement call on whether their background, skills, passion and timing make them better placed than anyone else in the world to win. I need to believe in them and I need to see that they believe in themselves.
As a company grows the role of investors change but the custodian of the vision remains with the Founders (and/or management) and that’s exactly where it belongs.