Co-Founder and Partner at NextView Ventures, Rob Go spends as much time as possible working with and advising entrepreneurs on how to develop products that solve important problems for everyday people. Prior to founding NextView, he focused on early stage investments in consumer web and mobile at Spark Capital -- so he knows more than a thing or two about what it takes for a software company to be successful.
A few months ago, we asked Rob what advice he would give to early-stage SaaS and tech companies about working with investors and getting funded.
Here's what he had to say on 4 crucial areas of the evaluation and funding process:
“In determining a tech company’s potential, I evaluate three things:
Size of the Total Opportunity – Is there a large market of potential users?
Timing – Why now? Is there a fundamental shift that will drive migration from existing software to something else? For example, the shift of enterprise software to the cloud created a moment-in-time opportunity for companies like Workday.
The Team – Is the team exceptional?”
ON GREAT PITCHES:
“Great pitch meetings are when founders are able to simultaneously craft an exciting story about the scale of the opportunity, as well as show mastery over the details of their business and their strategy for winning.”
ON DATA VS. TEAM INSTINCT:
“The metrics give you an idea of where things are today and their trajectory from the past, but businesses are not static and the context changes. The capabilities of the team help determine how well they will be able to improve the weaknesses of the product and see around corners as the context changes.”
“One exercise I’ve tried is to codify my mental decision-tree for early-stage investing. Essentially, it is the internal dialogue I tend to have with myself when evaluating companies, but by charting it out, it helped me to be more explicit about what attributes I’m looking for, and how my opinion about different attributes feeds into an ultimate decision.
Rather than replicate the entire decision three, I thought I’d share just a flavor. The first high-level questions I ask are:
Is this an awesome founder?
Is this a market I want to have an investment in? This incorporates both the total size potential of the opportunity and the attractiveness of the market itself.
Is there strong founder market fit? Is this an authentic idea, and does the capability of the founding team map well towards the needs of the market in the early stages of the business?
Here is the tree with some commentary on the different combinations below:
Want to learn more about digital sales and marketing?
Master digital sales and marketing when you join IMPACT+ for FREE. Gain instant access to exclusive courses and keynotes taught by Marcus Sheridan, Brian Halligan, Liz Moorehead, Ann Handley, David Cancel, Carina Duffy, Zach Basner, and more.