A year ago I posted about when I meet with entrepreneurs for the first time that I like to ask about the founding story, the plot of how the idea for the company was generated and how the principals in it came together. These intangible details of a founding story accurately portray a startup as a unique coalescence of real people, not just a valuable aggregation of human and technological capital.
I wanted to add that I believe that learning the founding story also helps us as VCs evaluate and better understand entrepreneurial teams in situations where we haven’t had prior experience working together. It faciliates VCs learning more about the company along many dimensions, as it sheds light on subtle cues about a team’s core and the values. And it provides perspective around the original thesis upon which the company was established. In understanding a startup’s narrative, we can better ascertain where blind spots could be in the team’s perspective. If there have been bumps along the way, what has the company held onto and what has evolved? How open are people to change and feedback from the original idea, while staying true to the essence of the fundamental thesis? (If the company is too new to have faced major obstacles, that fact exposes a lot as well.) In other words, learning the founding story is an attempt to proxy having had directly watched a startup grow over time. With a greater perspective of a company’s heritage, the more informed an investment decision VCs can make.