How We Changed Our Investment Process

The market has changed and so did our investment process: instead of 4.5 hours of the founders’ time we now require 17. The only thing that matters to us is profitability and we expect nothing less than reverence when founders approach us with their begging bowls

We’re obviously joking - even if some of our colleagues are not far off from that from what we heard.

Last year we did something most VCs have never done, we made our investment process public. After some mistakes and a lot of learnings we made some changes:

1. We removed the first hour with the partner that’s leading the investment: we only invest when we’ve known the company for more than six months so there’s no point in artificially creating that first step.
2. We removed the second hour with our Chief Science Officer: We don’t think a session like this helps. Having someone “looking under the hood” for an hour and coming up with a decision is not only dangerous, it’s also disrespectful towards years of hard work. We do have a Technical Advisory Board (TAB) of 20 scientists with whom we consult during the period when we’re building the relationship with the founders, enabling us to do more of the due diligence in the background and observe progress.
3. The third hour with our TAB is no longer mandatory and depends on the company. Sometimes we need more time and sometimes none at all.
4. We don’t proactively give feedback. Why? Because we don’t think that our opinion has any weight that should influence a founder one way or another.?

What didn’t change is that:

1. We invest “in between” rounds when the companies are not raising capital.
2. We build a relationship with the founders over six months or more before kickstarting the process.
3. We try to protect founders’ time more than anything else and have made our best efforts to keep this process under 5 hours.?
4. We’re usually the ones with the begging bowl :)

***

This?blog post?was originally posted on?Outsized Ventures' website.