When technology is no longer a differentiator, as seen in the crowdfunding space, a company's brand, positioning, and core values are the only way to stand out and attract customers. GiveForward succeeded by positioning itself around compassion and joy.
To gauge a founder's drive and potential for greatness, ask if they have ever been in the top 1% of any field, even an esoteric one. This unconventional question serves as a powerful proxy for ambition and the willingness to push through challenges, regardless of their professional background.
Exercising stock options is an investment decision, yet employees are rarely given the same information as investors. Employees should reframe this and request access to the company's data room to make an informed choice, pushing for greater transparency and fairness in startup equity compensation.
A clever strategy for first-time fund managers is to raise smaller checks from a large number of operators and domain experts. While harder to execute, this turns the LP base into a powerful, built-in expert network for diligence and support, converting a fundraising challenge into a strategic asset.
Small funds and solo GPs can gain an edge by not reserving capital for follow-on rounds. This strategy enforces discipline, avoids cognitive biases like sunk cost, and recognizes that the skill set for pre-seed diligence is fundamentally different from that required for later-stage investments.
Limited Partners, much like VCs searching for outlier founders, are often looking for fund managers who are "a little off." They value investors who think differently and don't follow the consensus, as this non-traditional approach is seen as the path to generating outsized returns.
Instead of coaching unconventional founders to be more palatable for mainstream Series A investors, early backers should encourage them to lean into their unique traits. The investor's role is to help them find the right future partners who appreciate their peculiar worldview, not to change it.
While every VC has a network, true sourcing edge comes from building a brand and belief system that resonates deeply with founders. This makes founders proactively seek you out, creating a high-quality inbound channel with deals that competitors aren't seeing, allowing a small fund to punch above its weight.