I guess two things:
#1, it is taking the leap to start your own business. This requires a mentality towards building companies and creating value from scratch.
#2, it is expecting and feeling comfortable in a volatile environment and the challenging ups and downs that come with doing #1.
Specifically to founders I am looking for chemistry. This is a very personal thing. If I am going to spend a lot of time supporting a founder and their business, the chemistry and fit needs to be great so the time spent together is enjoyable. From a broader perspective I am looking for a deep level of commitment and passion, orientation towards results and solving problems.
I’m also looking for perseverance. I invest in founders who have demonstrated a track record of extreme perseverance. In my own case it took 12 years to build my first company. With startups, what we predict day one is never ever how things actually go. Success requires real stamina. My experience has shown that things are usually more challenging and take longer than initially anticipated.
I prefer to invest in businesses where I can personally add value. If the business is one that I can contribute my expertise and experience increase or accelerate success, I’ll consider investing. An example is consumer tech.
Then of course I am looking at the fundamentals. Most of my investments are in Vietnam. Since Vietnam is a developing market, I look for precedents in other markets where the same business has already worked. I think it is rare to find something invented in Vietnam that hasn‘t been thought of or already succeeded somewhere else. It also has to be the right product at the right time for the Vietnam market. Two years ago I lost money investing in an app to enable employers to offer flexible benefits to their employee and increase employee engagement. Similar solutions existed and were successful in other markets, however the timing was too early for the Vietnam market.
One big lesson is around hiring: I hired exceptionally talented individuals often with seniority and experience well ahead of the stage of our business. These individuals who some might argue were over-qualified or too expensive for a company at our stage were able to pull us to where we needed to be in the future, vs struggle trying to keep up as we grew.
Another big lesson also relates to people: trying to constantly examine and reflect on my own strengths and weaknesses, and hiring to balance my weaknesses. One area where I think I have strength is high-level strategic and creative thinking. On the flipside I am weak at real detailed project management and execution. I am a great idea generator but a lousy task manager. I realized this early on and looked specifically for people to counterbalance this weakness.
Another lesson learned from my first venture: I was misguided by the idea that to be successful as an entrepreneur it was necessary to achieve an exit. This notion was validated and supported by the entrepreneurial press that celebrate founders who achieve exit, also the investors who we were raising money from, the board we put together (mostly professional investors) and finally the way we structured senior executive compensation (with big bonuses paid at exit). We created a mentality within the company that we must eventually sell it. Don’t get me wrong, I am grateful for our exit. But it was not the only way. Looking back I now see how fortunate I was to have meaningful work from which I derived a deep and authentic sense of purpose. It’s cliché and obvious, but while making money is nice, the old saying is also true: money doesn’t buy happiness.
One is the importance of developing an approach and framework and sticking to it. For example as an angel investor I write $25-50K checks as part of multi investor seed rounds. And I wont invest unless there is a strong lead investor committed, managing DD and negotiating terms. Where I have made investments outside of this framework and not followed my own rules, usually because I was greedy and opportunistic, I went on to regret it.
Secondly, only invest in founding teams with the maturity, experience and capability to take their venture all the way across the finish line. It’s easy to get tempted to invest when the technology is really cool, or the business itself has the opportunity to be a big winner. But without a well-rounded, capable team it is virtually impossible to capture value and create a winning business.
Finally, focus on investments where there is some connection to your interests, experience and strengths, where you can provide value. As we’ve discussed, in the challenging world of early stage start-ups the path to success is inevitably longer and more challenging than what is laid out in the pitch deck. When you can help navigate these challenges, there’s an opportunity to influence and support your $25K investment to grow to be worth $1M.
Only one? Let me think.
One important bit of advice: just start! Sometimes the hardest thing is taking that initial leap and saying „I am gonna do this“. For myself, since I was 14 years old I was thinking: what business can I start and starting little businesses here and there. I constantly looked for opportunities – even small. I felt I was meant to be an entrepreneur. Still, it was scary to take the first step, leave my safe and stable life behind, and start up.
From Entrepreneurs For Entrepreneurs is a weekly interview session with some of the most influential entrepreneurs, creators and investors. Goal is to share our lessons learned and help to shape the next generation of entrepreneurs.