We’re conviction investors. That means we rely on our own judgement to make decisions. And when we really like something, we're ready to pounce.
We don’t wait to see who else is investing. We don’t ask you to come back in a few weeks with social proof or other numbers. We don’t equivocate. We make you an offer as soon as we can, because we’re respectful of the entrepreneurial process and see you as our customer.
That doesn’t mean we don’t do our diligence. In fact, diligence is crucial for developing conviction. How do we know what to like if we don’t know what it is?
So sometimes we’ll need more time than other investors in the market who are technical traders – and who will invest because of other folks in the round, because the segment is hot, because the founders are pushy, and so on. We feel we owe it to the founders to be more thoughtful than that. Our investment is a recommendation to the rest of the market and we take that role seriously.
The flipside of conviction investing is passing with conviction. We strive to avoid FOMO. We like saying No clearly and as early as we can. We want to be respectful of your time. Again, you’re our potential customer and just because we choose not to work with 99% of the customers who come through our door, doesn’t mean we think less of them. We’re just not the right investor in these cases.
Like everyone, we will sometimes be a little vague about why we’re passing. Mainly that’s because we don’t want to hurt your feelings. It’s awkward telling someone that our judgement of their capabilities or character is the main reason we’re not investing. And it’s not like people don’t change over time. Leaders and teams evolve. So when you feel our reasons aren’t super clear, frequently it’s a team issue.
When passing, we may tell you that our decision is often wrong – because it really is. Of course in the vast majority of cases we should have passed. But the false negatives are significant (we saw e.g. Zendesk, Spotify, Deliveroo at seed and failed to invest in any of them). Mistakes of omission in venture tend to get bigger over time.
We’ll also often tell you that we’d like to revisit our decision at the next financing round. Yes, that’s an option to change our mind. Because see above – we’re frequently wrong. But it’s also an invitation for you: at the next financing round, get back in touch and we’ll take a look. Just because we’ve passed doesn’t mean our door is closed forever.
What it isn’t, however, is the invitation to send us an email every two weeks to tell us how it’s going. If we wanted you to do that, we’d tell you. Assuming you’ll raise every 12-18 months, an update once every six months is the right sort of frequency.
What most people don’t realize is that venture is very much a head, heart and gut kind of investing – more so than any other investment activity I’ve seen. And once the decision is made, I recommend dignity – you won’t win someone over at that point with rational arguments. You may if your metrics go gangbusters, you’ve added significantly to the team, or made other changes to the business. But explaining to us why we’re wrong when we already know that we're often wrong is mostly a losing tactic.
That brings me to my last point: work with the nice VCs – and I don’t just mean charisma. Work with the folks that don’t posture, that aren’t overly aggressive, that aren’t pushy. You want to have calm, steady, wise people on your cap table – because it’s a long, long journey and the guys that let themselves be guided by fear before the investment will do so while they’re on your board, too. And the aggressive and greedy ones will be a nightmare when you have to sell the business.
Do we live up to all of these principles all of the time? Of course not - we're human, we make mistakes, we veer from the plan, we get busy and shortsighted and fearful. But as a statement of intent, this is how we see ourselves and what we try to live up to, every day.