Midnight Text: Founder Green Flags

At the early stage of a business, there is one thing that stands above the rest in terms of importance. The founding team.

Without many validation points, most pre-seed investors are betting on the people behind the idea. They are betting that you and your co-founders will figure things out and forge a path ahead.

So, how do you signal to investors that you’re a good bet?

I got this question after our last Midnight Text. The framing was focused on “red flags” for investors. Instead, I’m going to tackle some of the green flags - what makes founders awesome to work with. You can think of red flags as the opposite of these traits or as the lack of clarity around any of these areas.

I’ll also highlight some questions you can prep as you think about how to present yourself. A lot of founders over-index on presenting the business, but you are just as important to the story.

Motivation: Why Are You on This Journey?

Investors want to know your "why." Building a company from the ground up is incredibly difficult. A green flag is a founder who is deeply motivated to solve the problem they are working on.

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How Do You Tell Your Story?

Effective communication is crucial. A start-up is a story. Investors want to see that you can articulate your journey, vision, and strategy clearly and compellingly. You will be selling not just these investors but customers, employees, and upstream investors. Your ability to communicate a vision is essential to your success.

Key Questions to Address:

• Can you succinctly share your journey and what you’ve built or led?
• Do you share credible data that supports your narrative?
• Can you connect with your audience and paint a picture?

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Founder-Concept Fit: Are You the Right Person for This Problem?

Investors are betting on you as much as they are on your idea. They need to believe that you are the right person for the problem you are trying to solve. Here’s how to demonstrate your fit:

• Highlight Relevant Experience: Share your background and how it aligns with the problem you’re solving. If you have industry contacts or expertise, emphasize this.
• Showcase Your Skills: Be clear about your abilities to sell, build, or be a generalist. Provide examples of past successes.
• Present Your Unique POV: Articulate a unique perspective on the market - what gives you an edge and a right to win in this space?

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Flexibility: Can You Handle Change?

The startup journey is fraught with changes. Investors want to know that as a founder you will adapt to the changing landscape and to customer feedback. To highlight your skills in this area you can:

• Share Past Experiences: Talk about previous 0-1 experiences or significant challenges you’ve faced. Highlight how you prioritized your time and made pivotal decisions.
• Discuss Pivots and Learnings: Be open about mistakes and what you learned from them. Show that you can adapt and grow.

As you are preparing to meet with investors, try to find spaces in your story where you can highlight your (and your team's) personal characteristics. Especially in the early stages, you are the biggest bet.  

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