Intentional Investing

Aug 05, 2023

The Contents section is so you can skip to any pieces of interest.

I keep this simple because unbundled vc is just me.

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1. Intentional Investing

What is Intentional Investing

Too many investors have the identical investment process. They do what everyone has done since time immemorial. Receive a pitch deck, have a non-decision maker review it, get a first meeting with a non-decision maker who has to second guess what a Partner is interested in. Then, if you are lucky, meet a Partner who is a decision-maker.

Because everybody does it, nobody thinks if their process is fit for purpose. Nobody thinks about what they want to achieve and how they might best achieve it.

Intentional Investing is just that. Know what you are trying to achieve and take a first principles approach to trying to achieve it.

Here I am going to focus specifically on my investment process.

What am I trying to achieve

I want to make the best investments that generate the highest returns.

There are two parts to this:

Generate the best possible set of startups to choose from

Choose exceptionally from that opportunity set

Generate the best possible set of startups to choose from

At a high level, what do I need to achieve in my investment process to generate the best opportunity set of startups to choose from?

I need to act in a way that encourages founders to choose me as an investor if a deal is competitive

I need to act in a way that encourages founders I have met to recommend me to other founders

Both of these require pretty similar things:

Speed of execution. If you make fast decisions, founders appreciate that. If you have an intentional process, you will know much more quickly if an opportunity meets your criteria. Sometimes there is a tradeoff between gathering the information you need to make a decision and speed of execution. If you can optimise your process for gathering the right information you can minimise this. The tradeoff means sometimes it will be right to commit quickly even if you’d rather have more information. If the opportunity is desirable enough, you have to balance your chance of getting into the investment against the benefit of additional information.

Clarity of process. Founders appreciate knowing what to expect ahead of time. Don’t leave them waiting for a reply to an email or for an answer and not knowing when to expect to hear from you. This requires good process at your end, particularly if you have to coordinate multiple people to decide if you are going forward.

Feedback. Founders appreciate feedback. If they’re not getting feedback tell them ahead of time. If they are getting feedback, make sure it is relevant and not box-ticking. That looks worse than no feedback at all.

Choose exceptionally from that opportunity set

I need to know my investment criteria and make sure my process intentionally looks for those

What does choosing exceptionally mean in practice? I’m going to focus here on founder skills because this is where I feel most investors are weakest.

The founder skills I am looking for are:

Sales skills because they need to sell to investors, they need to sell their product and they need to be able to convince exceptional people who have many choices to come and work with them.

Decision-making skills because pre Series A, which is typically where I am investing, there are so many important decisions to be made that may make your startup radically different from how it looks today.

Tenacity because this journey will take a long time and, even if you are successful, there will be many lows along the way.

Nail your process

I design my process specifically to look for these skills.

Most people’s first step is a pitch deck. This tells you very little about founder strength. You can end up taking a meeting about a business that looks great and you instantly know the founder isn’t investable. You’ve wasted everybody’s time.

To solve this my first step is not a pitch deck but a short video pitch using Willo, an asynchronous video platform I led two rounds of investment into. That helps me get a feel for the founder as well as the business. In particular, it is helpful on the sales skill front. If it sounds like you can’t sell, there is no point in me meeting you. I will be wasting our time.

Nail your questions

Then we have our first meeting. I specifically ask about your background, try and dig into interesting points in your history where you had to make key decisions and get a feel for you across all three skill sets. I’m not just listening to what you say but how you say it.

I will ask you questions like, "How does your product differ from what you thought it would be on day one and how did you figure that out?" This helps me get a feel for your decision-making skills. It’s not easy to figure out what needs to change in a business and it’s not about what has changed, it’s about how you figured that out. That’s what tells me how you make decisions.

There are many other pieces. But fundamentally my process and my questions are there to figure out if your founder strengths match my criteria.

If you build it

These principles apply to any process you are building.

Here, if you can figure out what you are trying to achieve and how to achieve it, you will make great decisions and your deal flow will keep improving.

I am very fortunate my deal flow has improved and continues to as my full-time investor journey continues. I know exactly who I want to invest in and how to figure that out. I’m fortunate to have invested in some great founders and startups.

I’ve not missed a competitive deal yet and I’ve been in four competitive rounds. I know I will miss some. The onus is on me to make myself as attractive a proposition as possible to great founders.

If you invest intentionally, they will come.