Specific scheme to verify potential investments – Szymon Janiak

The post was originally published in Polish on on Szymon’s LinkedIn profile. Szymon kindly agreed to republish what we think is of great value to our readers.

The founder of a new company took offence at me yesterday because he felt offended that I didn’t want
to meet with him. And although I wrote back politely that the verification process has a specific process with us – I came across as arrogant in his eyes. On the same day, I received 9 other investment proposals.
I often hear that it is difficult to describe or present something well in a document – it is better to talk, because it will be easier and faster. Well – NO! For the purpose of this post I checked that in March this year I had 101 meetings, while in February 127. Only some of them were about new companies – the rest were current founders from the portfolio, team, advisors and other stakeholders of the VC fund.

I spend 25 minutes on the first meeting with a start-up. The most important thing, however, is that it happens only after we have decided on the basis of the deck that it is a match and we want to talk further. We analyse 1,300-1,500 companies a year, of which we invested in 12 in 2021. This is less than 1% and it is also true that the vast majority of start-ups drop out at the deck stage.

For a start-up, spending 25 minutes on a meeting with an investor may (not necessarily) be valuable.
For me, the same meeting can be simply a waste of time, because whether a company from the deck meets our investment criteria will be checked in 5 minutes – and a meeting in this area will be exactly
5 times longer. So if I talked to everyone – I wouldn’t have time to fulfill the other key responsibilities that
a fund management partner has. That’s why we operate to a set pattern of vetting potential investments. Always the same one, because it is proven and, in our opinion, optimal.

This is why the deck must be properly prepared – not perfunctory, not devoid of some information, not puzzling. A fund that has many proposals will never call to ask what the deck is about – it will cross it off the list and move on to the next one. A poorly prepared deck is therefore a loose – loose situation, because everyone loses out.

I always wonder why someone didn’t do their best. Because if:

1. He can’t prepare a presentation and explain to the VC what he is doing – then what will he show the client? – The company is not for me. 
2.  Doesn’t recognize that it’s important to put effort into the materials and perform well – Company not for me.
3. Knows he is not competent to make a deck but has not looked for, someone to help – another founder, mentor etc. – The company is not for me.

So it is not worth getting offended and interpreting certain behaviors only through your own prism. Because at the end of the day, if I meet everyone who wants me to, my investors will be offended that
I wasted their money – it’s just not possible.

P.S. Of course this works 2 ways – towards wasting start-ups time too.

#vc #venturecapital #startups

Translation: Krzysztof Kowalski