What I learned from investing in 20 startups in the last 2 years ??????

Over the last two years, I invested in 20 start-ups. I wrote this article a couple of months for myself to collect my learnings, but maybe it's helpful for some of you out there:

???? Build the future

The best founder motivation to start a company is to innovate, i.e. to build the future they desire. I try to identify this motivation before I invest, but once I start working with them, you clearly see how the founder is way more interested in building a hugely innovative product vs. who is mainly interested in making money. The former works out much better and is also more interesting to work with, as people who are truly excited about the future are inspiring to hang out with.

?? Solve conflict with your co-founders quickly

Building a company together is not always like sailing in smooth waters. All early stage co-founders have days, weeks or even months where they just really don't want to work with each other, mostly because they think the other one is stupid or should work more. The main reason though is that they don't make progress as fast as they were hoping. If you are mad at each other, just go for dinner and talk about it. That's one of the most important skills as co-founders anyways, so become good at it early on.

?? Send frequent investor reports

Founders who send an investor report at least every month do way better than founders who stay silent for a long time. I don't know if it's because the monthly update is a good routine for founders to take a step back and reflect on their progress and then define new goals for the next month, or if it's just that they are more organized and thus stuff tends to work out better for them.

???? Be prepared and on time for 1 on 1s

Founders who are well prepared and show up on time for 1:1 sessions with me are by far the best founders. Maybe for the same reasons as the investor report, but I also think they get a lot more out of me, because they really think about what I can help them with and give me updates in writing, so we can spend our face time on high value activities like brainstorming and problem solving. Founders who don't prepare mostly spend the time giving me an update, which is interesting for me, but not helpful to them.

?? Tell investors when to not give advice

The best founders tell me what to not give advice on. I sometimes start to give advice on topics where I actually have low believability. I started to make an effort to resist this urge and instead ask "how can I help?”. In case I forget this, just tell me (and other investors you talk to) to focus on a topic you want advice on.

???? Hire product focused team members

The startups that only have tech co-founders tend to think that they should hire 'business people' to talk to users and sell the product. However, that’s exactly the founders’ job: interview users and do the customer discovery and close at least the first the deals. If it's a B2C business, it's so easy to do performance marketing these days and if you do it yourself, you learn a lot what works and what doesn't with your target audience, so better do it yourself. I'd always hire a product designer and engineers first to help implement fast what I learned after talking to users.

?? Focus on users instead of investors

It's better to resist the urge to raise a lot of money in the early days. It's much better to keep focusing on finding the right user group and solving their problem really well. Once you take on money, you hire people and defocus from this extremely valuable first phase. Some call it customer discovery, others call it 'make the first 100 users really love your product'. I like the latter, as it's so easy to understand what to do and until when you should do it!

? Raise money from founders

When you raise money from angels, you raise money from former/actual founders who have a high energy level and know what it feels like to build products and companies. It typically feels great to work with them and they are very supportive. Raising a lot of money from VCs early typically doesn’t get you to product market fit faster, the bottleneck is figuring out who your target customers are and then figuring out what product they'd rip out of your hands to use it and then to build that product.

?? Raise money based on traction

User traction and and proving that you have raving fans beats a great presentation every single time. So if somehow VCs don't see what you see yet, convince them by getting 100 raving fans. Once you have 100, it's very easy to get to 1,000 and then to 10,000, because your users will recommend your product to others and that makes your user base scale exponentially. The other option is to become better at presenting your company, without significantly increasing the traction. This is extremely tedious and often doesn't really help. Creating traction always helps, so I always recommend doing that instead and send frequent updates to potential investors with traction updates

Let me know if you're working on building the future and if you are early stage, I'd love to chat.

Keep building the future! Konstantin