Several months ago I was giving a high profile, out-of-town VC a tour of the Atlanta Tech Village. As we walked around the rooftop patio, I asked about one of his investments I had read about previously and he said something that surprised me, “I don’t think the idea for [redacted] is that good, but I love the entrepreneur and invested just so I could invest in whatever company he does after this one.” Wow! This is an investor who has put many millions of dollars into a startup saying the idea is only OK but that’s it’s all about the belief in this person.
Naturally, I pressed further and asked about expected return on investment and how it compares to other investments. The expectation is still to make good money (e.g. a 10x), but that there’s no way it could be a 100x (or 1000x like Jeff Clavier’s Fitbit investment). So, disliking an idea while still believing it can generate good financial returns are not mutually exclusive. Regardless, a fundamental belief in the entrepreneur is the driving force.
The next time you hear of an investor saying ‘no’ because they’re not interested in the idea, remember that the entrepreneur is even more important. In fact, some investors bet on the entrepreneur regardless of the idea.
What else? What are some more thoughts on the idea of investing in an entrepreneur and disliking the idea?