This is so true. As founder of an early-stage DeepTech venture (AGI systems for safety-critical aerospace applications, based on my own IP) with a high cost of entry, your article very much reflects what I have seen since I started talking to VCs.
In my experience there are essentially four groups of VCs:
The first group, which were the majority of VCs I came across, are really only interested in run-of-the-mill SaaS or other services types of startups which have been bootstrapped to MVP (usually built quickly using someone else’s technology) and which already have some early revenue. Their exit strategy is limited to an IPO or M&A in a few years time. The upside for DeepTech founders with those investors is that they won’t waste your time as they’ll instantly tell you that they’re not interested in anything else than lift & shift type startups (“mole hills”, i.e. businesses which are eventually bought by someone else).
Then there are the FOMO VCs which invest in anything that’s currently seen as “hot”, and unless you’re happen to build inside one of the current bubbles they’ll unlikely to be interested so they, too, won’t waste a founder’s time (FOMO VCs are really only dangerous for their funds due to their propensity to happily invest in large-scale scams).
But the really dangerous types are what I call “the posers”, which are VCs who claim to invest into DeepTech/FrontierTech/DefTech but who clearly have no grasp of what it takes to develop a complex groundbreaking product for a highly regulated market like aerospace, or the costs and complexity of developing safety-critical software or the impact of the regulatory burden. A bit like the FOMO VCs, they want to invest in those sectors because they like the better than average returns, but their exit strategies are limited to IPO and M&As in the same way as for regular types of startups (they’re looking for lift & shift, not “monuments”). Those are the types that will waste the time of unprepared DeepTech founders, and if they happen to become your investor partner then not only will they be unable to help you solving any problems, they’ll also create unnecessary friction because they don’t understand the challenges your business goes through.
The great VCs are those described in the article. They understand the challenges of DeepTech/FrontierTech, the impact of regulation, and what it takes to build something groundbreaking. They also know that to achieve great things and build “monuments” one has to take great risks. But they are also rarer as hen’s teeth.
Thanks Norman! I should add that I met some great people in each of those categories (and especially the FOMO types can be great fun!), but that doesn't necessarily mean I would enter into a business partnership with all of them.
This is so true. As founder of an early-stage DeepTech venture (AGI systems for safety-critical aerospace applications, based on my own IP) with a high cost of entry, your article very much reflects what I have seen since I started talking to VCs.
In my experience there are essentially four groups of VCs:
The first group, which were the majority of VCs I came across, are really only interested in run-of-the-mill SaaS or other services types of startups which have been bootstrapped to MVP (usually built quickly using someone else’s technology) and which already have some early revenue. Their exit strategy is limited to an IPO or M&A in a few years time. The upside for DeepTech founders with those investors is that they won’t waste your time as they’ll instantly tell you that they’re not interested in anything else than lift & shift type startups (“mole hills”, i.e. businesses which are eventually bought by someone else).
Then there are the FOMO VCs which invest in anything that’s currently seen as “hot”, and unless you’re happen to build inside one of the current bubbles they’ll unlikely to be interested so they, too, won’t waste a founder’s time (FOMO VCs are really only dangerous for their funds due to their propensity to happily invest in large-scale scams).
But the really dangerous types are what I call “the posers”, which are VCs who claim to invest into DeepTech/FrontierTech/DefTech but who clearly have no grasp of what it takes to develop a complex groundbreaking product for a highly regulated market like aerospace, or the costs and complexity of developing safety-critical software or the impact of the regulatory burden. A bit like the FOMO VCs, they want to invest in those sectors because they like the better than average returns, but their exit strategies are limited to IPO and M&As in the same way as for regular types of startups (they’re looking for lift & shift, not “monuments”). Those are the types that will waste the time of unprepared DeepTech founders, and if they happen to become your investor partner then not only will they be unable to help you solving any problems, they’ll also create unnecessary friction because they don’t understand the challenges your business goes through.
The great VCs are those described in the article. They understand the challenges of DeepTech/FrontierTech, the impact of regulation, and what it takes to build something groundbreaking. They also know that to achieve great things and build “monuments” one has to take great risks. But they are also rarer as hen’s teeth.
Great article, Norman! Thanks for sharing!
Hi Benjamin. Your further breakdown of types of VCs is brilliant!!
Thanks Norman! I should add that I met some great people in each of those categories (and especially the FOMO types can be great fun!), but that doesn't necessarily mean I would enter into a business partnership with all of them.
Illuminating as usual, Norman!