There is an exception to every rule, and most of our investments will violate one or more of our guidelines. That said, we summarize here the Platonic ideal of investments we make.
Our typical check size is $200,000 to $1,000,000. We lead rounds and will also co-invest. We can make follow-on investments into our companies where helpful.
We are glad to look at any early-stage business seeking funding. That said, we’re particularly excited about businesses which:
- Target niches, no matter how small, but especially if they have logical adjacencies
- Operate in un-sexy industries, not in the limelight of traditional VC
- Solving “Dual PhD problems”: companies at the intersection of more than 1 domain
- Are capital-efficient, targeting 40%+ gross margins
- Can easily be turned profitable, even if you do not manage the business for profitability in the near future
- Plan to use our capital to double down on a proven model, or enter a logically adjacent market.
We’re most interested in working with teams:
- With “Founder-Market Fit”. You’re obsessed with the problem you’re solving, fit into the target market, and have some relevant experience.
- Focused on product, market, and business model, not press coverage and VC funding.
- Based outside of the major US tech hubs (i.e., New York City, Boston, California).
- Sensitive to managing their capital table efficiently, e.g., successful second-time founders who realized they only owned a small percentage of their company at exit.
- Obsessed with understanding and implementing Standard Operating Procedures (“S.O.P.s”). We think founders should approach new business models and industries creatively, and simultaneously, take advantage of existing best practices.
- Hailing from non-traditional backgrounds: women, racial minorities, top talent from state schools, etc. We like people with something to prove.
- With international roots, including immigrant founders and engineering based outside of the US. For more on this, see Why VCs are investing in international startups and Why international startups love NY.
It is unlikely that we’ll invest in companies with any of these attributes:
- Under $10,000/month in revenue. We’re focused on companies which have already shipped a product that customers love. Your product is incomplete, buggy, ugly? If people are still buying it, that proves the value of what you’re doing.
- Raising a round of over $2,000,000, which usually indicates that they’re not a fit for our capital-efficient focus.
- Have raised money in the past from traditional VCs who are pressuring the company to stay focused on raising larger and larger traditional VC rounds.
- Not a US Corporate structure (C corporation, S corporation, LLC)
- Not a technology-centric or tech-enabled company. We don’t need breakthrough technology, but you should be rethinking from first principles how to use modern technologies in all aspects of the business. One of the reasons startups win is that they don’t have legacy tech stacks; they can design the business around modern best practices.
- Blitzscale market: one with “winner take all” or “land grab” dynamics. These tend to reward the company that raises the most venture capital, and we’re not playing that game.
- “Use of proceeds” is “Achieve a milestone that helps us raise more VC”. We always ask what you’re going to do with our investment that you couldn’t do otherwise. If the answer is, “Achieve growth that will attract top-tier VCs”, we’re not a great fit to invest in your company. To be clear, if you want to raise traditional VC, we’ll support you! But for the companies we invest in, we think the #1 goal is to build a healthy, self-sustaining business.
- CEOs who spend a lot of energy meeting VCs and attending startup conferences. We’d much rather talk with management teams who spend time at the conferences which their clients attend.
- Founder’s goal is to build a company with a few million in revenue. We want to work with founders who want to build legacy-defining, generational companies…they just want to own most of the equity when doing so.
We’ve shared below our formal evaluation rubric. Few of these are absolute obstacles, but each of these reduce the odds we’ll invest.
Sample red flags
|FINANCE||Business model/ financial model||
|Valuation/ structure / Deal dynamics||
We invest based on the merit of opportunities presented, without regard to race, religion, national origin, age, sex, marital status, sexual orientation, or any other basis.