5 Things Venture Capitalists Want to See
Photo Credit: Gold Key to Success over United States Dollars in Cash

5 Things Venture Capitalists Want to See

If you’re the “genius Black architect” of that uncommon platform creating market re-defining, preconception shattering, totally disruptive innovation–this is for you, and your revolutionary, eye-opening, mind melting, irresistible product. You’ve got the “once in a generation,” universal-need addressing, unreachable-itch scratching, solution — that VCs refuse to fund.

As an attorney living in Silicon Valley, I’ve helped women, Black, and minority founders close about $50 Million in investments and I’m on a mission to create access to $1 Billion by 2025.

While pursuing the mission, I’ve formed friendships with the top venture capital firms in the nation, as well as a majority of the Black institutional and individual investors. I’ve been able to help with many of the investment deals you’ve read headlines about.

I want to share what I’ve learned so far and hopefully help spark a Black entrepreneurial renaissance (especially since now, we can leverage all of this new knowledge aunty internet brings to our generation).

Venture Capital is somewhat of a paradox. It’s the only sport where the players admit they know nothing, while also pretending to be psychic. Conventional wisdom says that over 90% of startups fail, but the ones that win, win big.

High risk, high reward — that’s what makes it venture capital. It’s also the reason no VC in the world can claim to know exactly what they’re doing. According to research by Harvard Professor Shikhar Ghosh, 75% of VC backed companies fail too. It’s an industry of experts at guessing. The game is played by (1) crunching as many numbers as you can, (2) matching patterns of previous successful companies, (3) following the investments of leading VCs, and most importantly (4) spraying your money across hopeful winners and praying one of them offsets the losses of the others. Therein lies the paradox and pivotal question. If no one has the magic formula, most companies fail anyway, and VCs are largely just spraying and praying–why aren’t they backing you or other Black founders?

The answer is probably Racism, but it could also be that you’re missing some of the fundamentals that investors look for; or you just don’t know how to demonstrate that you have them.

So here’s a list of 5 things VC investors want to see:

1. A Qualified CTO 

The “tech” in “tech company” stands for “tech”-nology so “tech”-nically you need a qualified Chief Technology Officer to be “tech”-en seriously. Otherwise, VCs will tell you to “tech-yo ass home” and try again next time.

Unfortunately, because of systemic educational racism, Black schools and communities produce fewer coders and software engineers, making it more difficult for Black founders to find sophisticated coders to link up with. You might achieve lift off by hiring overseas techies to build your MVP but (1) I’ve seen many founders get ripped off by those service providers, and (2) VCs want a dedicated team member. Expand your network beyond your geography. Venture to spaces where Black coders congregate and make friends. Whatever you have to do, this one is not negotiable so figure it out.

2. A Team With a Track Record of Success 

Often times VCs say they will only invest in a team that has had at least one successful venture together (highly profitable, acquisition, or IPO). However, one could overcome this if the team members have had individual entrepreneurial success, even if it’s not as a team. Less often will VCs invest in a team simply because the members have been successful in endeavors unrelated to entrepreneurship (fame, accolades, and narratives don’t mean much). If your team is just the homies who have no relevant skills or successes, you better have the product of the century or you can hang it up.

Actually, even if you have the product of the century it prolly ain’t gon happen bruh. So yea, tighten up ya circle.

3. A Compelling Pitch/Deck 

The presentation should be clean and straightforward. It should include stats but only those relevant to the bottom line. As with any good presentation, it should tell a story (and not a dry ass one).

Here’s a common setup:

1. Problem

2. Solution (product)

3. Market

4. Competitive Advantage

5. Team

As for the actual pitch, your only job is to bring the aforementioned ingredients to life with poise and confidence. The product and stats should do the heavy lifting. You want to inspire, but a fancy presentation with no substance is just annoying.

4. Incubator/Accelerator Completion 

Based on Crunchbase data, here’s a list of the top 5 incubators/accelerators in the world by number of exits. Get your shit together, apply, and win demo day. Then you’ll be one cha cha slide hop closer to closing that first round. Unless of course, racism.

1. YCombinator

2. 500Startups

3. Techstars

4. Plug and Play

5. MassChallenge

6. SOSV

7. Startupbootcamp

8. Internet Initiatives Development Fund (IIDF)

9. Wayra

10. Start-up Chile

5. Grit

I won’t lecture you about grit. If you’re Black, you were probably imbued with a boatload of it at conception (a little genetic gift from the good ole ancestors). Grit is the thing that allowed you to sit through all those cornrow sessions even though we all know you’re tender-headed. It’s how you survived church growing up without dying from restlessness or being killed via grandma’s death stare. It’s the stuff you used to persevere through an education machine that expected you to be captivated by white dudes in wigs putting obvious shit in iambic pentameter. It’s the reason you can open your eyes daily and resume your relentless pursuit of happiness even within an era that forces you to persuade the matrix that you matter. No, I won’t lecture you about grit. You are grit personified, diamondized by generations of pressure. All you need now is the audacity to leverage it in your favor.

Go head Black founder, you got this.

I’m an attorney living in Silicon Valley (let’s pause here for a few disclaimers so I don’t get disbarred, yay! (i) nothing in this article is legal advice, (ii) I’m required to tell you that I’m licensed in Connecticut only. Gotta get re-barred when you move to a new jurisdiction, annoying!). I work for one of the top 3 law firms in the world for Tech Startups and Venture Capital.