(Im)prove Yourself when Fundraising.

I saw two fund-raising pitches in the last two weeks with pseudo portfolios — there must have been a recent book or blog post about it. Both had pseudo portfolios of seed rounds they’ve “seen” and “would have invested in if they had the money”.

The two pitches were very different. The first one was a seasoned investor with a long track record of previous A- and B-stage investments, but no seed investments. He had to pass on many of the seed investments he had seen right away because of his previous fund’s focus and portfolio construction. The second was a tech-entrepreneur-gone-VC-investor, showing a list of “recent reals I’ve had access to”.

The later investor was all about name-dropping of startups that raised their round. There was no reflection on process, on deals he saw and didn’t want to invest in and why. Seeing a deal is also not the same as ultimately pulling the trigger. Or even being able to actually wire the money with tough competition for hot deals. I also remember a number of hot deals that weren’t so hot anymore after the second or third round, and some other deals that seemed mediocre or weird in their seed round and became the rock stars and rocket ships after their Series C. Also fun: I made four calls to CEOs of startups he mentioned. Two of them knew him … but had never talked to him regarding their new startup.

The former investor was talking about every one of these deals in the context of his early-stage fund and investment thesis. There was a real reflection on pricing and valuations in different segments, of portfolio construction, of follow-on reserves, on the fund’s risk capacity, and the fund’s platform fit regarding differentiation and help he could provide and risks he would reduce.

I like the investor who wants to prove himself, who follows a thesis for a new area of operations and provides data, or at least anecdotal evidence. I believe it is better to show how you grow and improve against your former self rather than throw around some abstract “what-if” scenarios.

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