Strong Opinions @marksbirch

brycedotvc:

…The problem with early stage investing is that markets can never be sized in Excel. If they could be reduced to a formula, we’d all be working at hedge funds. No, the essence of early stage investing is more instinctual…It will be found in the connection an investor makes to you, your product and your vision. Either they will believe it or they won’t. If they do, they’ll want to invest. If they don’t, they’ll simply keep wrestling with the question of “how big can this get” in an unresolvable circle of swirling doubt. All of the Excel wizardry in the world won’t resolve it.

Excel is the anathema of early stage investing.  Financial models are diametrically opposed to the types of innovation that occur before a business model and product-market fit evolves.  This is why much of the R&D in corporations results in failure, they let the accountants into the budget discussions.  This is also why the startup ecosystem is so critical to innovation and ultimately our economy.

That is why when I see a business plan that is more than ten pages long, I know that I am wasting my time.  The startup founders most likely used a business plan consultant to gin up a bunch of random numbers formulating hockey stick projections that get the investors to salivate.  Unfortunately, the savvy investors already know the projections are rubbish.

Find investors that are passionate about your idea.  They are the ones that get your passion and the idea and the risks involved.  Once the discussions lean towards markets and financials, you are losing the conversation.