What I look for in an investment opportunity.
At the high-level, there are two pieces that I look for in an investment opportunity. The first piece is focused on assessing the entrepreneur. The second piece is focused on assessing the business.
Part I: The Entrepreneur
I’m often asked what it takes to be a successful entrepreneur. The two most important traits are clarity and resilience. Everything falls beneath these two.
Clarity is inextricably linked to your purpose - why are you doing this startup? Having clarity on your purpose will flow on to pursuing a clear business model. It will define the choices you make around your target market, your technology stack, team members, what comes out in due diligence etc. Clarity also gives you the focus to figure out what is not important.
Why you do what you do is also linked to awareness - of your feelings, and how other people are feeling. This clarity of EQ and consciousness helps you to become a better leader.
Resilience is the ability to emotionally bounce back. As an entrepreneur, shit is going to happen, and how you handle that is the difference between success and not.
Of the two traits, achieving clarity is harder to master. As humans we are naturally resilient creatures - to some extent it is built into us. And people that start companies are generally quite resilient.
But if you’re not clear on why you are doing this, then you are more likely to give up.
As an investor, how do I recognise a founder who has clarity? I keep on asking why - from why you chose your founding team to your choice of X and Y. Eventually I might bump on a fuzzy area, and see the part that doesn’t make sense.
Part II: The Business
A startup goes through two phases.
Phase 1 is experimental, where you are trying different ideas to find something that works. Run the ‘sales learning curve’ to find a model that acquires users, generates revenue, and can scale. That’s when you have figured out a repeatable model to execute.
Phase 2 is the crank-up phase - when you know the blueprint plan, you get the money from us and crank it up. You know that your small-scale successes are repeatable for mass-scale execution and success.
Monk’s Hill Ventures invests at the Series A stage, which means we expect the business to already have a scalable and repeatable plan to execute. As VCs we are putting in money to rocket fuel your growth, and enable you to implement your trialed and proven template.
Finally, are you a profitable company? In this frothy VC funding environment, it’s more important than ever that your unit economics and gross margins are healthy.
This is the trifactor that I look for in a business: scalability, repeatability, and profitability.