The “Intangible” Game: How VCs See You

By Omri Drory

Compiled by: TechFlow

 

You just gave a presentation and you think you did a great job. You feel good.

As you log out of a Zoom call or leave a conference room, you might wonder: What on earth are investors thinking at this moment?

Let's unravel this mystery. The investors you just introduced looked at each other for a moment. In that moment, there was an indescribable atmosphere. This atmosphere usually develops into one of the following two situations:

Scenario 1: We are so enthusiastic that we can’t wait to start due diligence and are ready to call our partners to pitch you.

Scenario 2: The atmosphere is quiet, everyone just shrugs, glancing at each other, with an intuition rising—this may not be what we want.

We pursue option 1, that energetic feeling that makes us love this work and willing to listen to countless pitches. Unfortunately, this situation is not common. If your pitch falls into the atmosphere of option 2, it will be very difficult to turn the tide and enter the state of option 1.

The importance of first impressions far exceeds people's imaginations.

Worse, if you belong to 'scenario 2', most venture capitalists won't even tell you the real reason. The worst VCs will stall, waiting to see if other 'top VCs' will make a decision first while giving you the runaround.

We once wrote about the core focus points of our investment decisions. The hardest feedback to give is not about the uniqueness of the technology or the potential of the market, but about the founder themselves.

Sometimes, the reason investors do not invest is you, more specifically, their impression of you.

Even in the biotech field, where science and intellectual property are key factors, this phenomenon still exists. In the software field, this phenomenon is particularly pronounced because transformation is almost inevitable.

Seed round investment is essentially an investment in people. Investors need to be convinced that you are the one who can take the seed round all the way to a successful exit. This feedback is the hardest to accept because it seems unchangeable.

I write this article because I believe that if you can look at problems from a broader perspective, you have the opportunity to take action. Even if you have excellent technology and a sufficiently large market, it would be a huge regret if you don't realize that many VCs expect to see certain 'intangible traits' in a pitch.

Best case scenario

When investors feel excited about a founder, they typically describe them with one word: 'convincing.'

This is a very crucial word.

Of course, this is of no help to you. After all, how could you possibly know what traits a VC would find appealing?

When most VCs find someone appealing, they mean: I must invest in this person—it's an indescribable feeling that we only know when we see and feel it.

A fitting analogy might be the so-called 'elusive trait' in football. When evaluating potential NFL quarterbacks, scouts usually score based on specific metrics like accuracy, footwork, and strength, but there’s also a trait that cannot be measured by data. This 'elusive trait' is an intuitive judgment about whether the scout believes someone is a born winner. This feeling is familiar to us... just like when Tom Brady or Patrick Mahomes are trailing in the last few minutes of a game, we have a conviction that they will lead the team to a comeback and win.

Once you succeed, everyone will say you had that ability from the start. But the real key is how to make others believe you have that potential when you are just starting.

While no one can draw a perfectly accurate blueprint of 'founder traits', the following elements may get close to the answer.

Trait 1: You have unwavering perseverance.

Starting a company is a worthy endeavor, but most of the time, it is not easy.

In one sentence, the job of a founder is: silently endure hardships.

Your health may be affected.

Your close relationships may be impacted.

You will feel endless 'fear of missing out' (FOMO) and 'imposter syndrome'—wondering why others are fundraising, hiring, and developing while you are standing still.

Half the time, you will feel like you have no idea what you are doing.

You will face some foreseeable difficulties and encounter some completely unexpected challenges.

When I was a CEO, during the toughest times, I would feel a 'deathly constriction' deep inside.

Please read these words again, and think about your current life. Perhaps you are pursuing a postdoc, or you have a stable job at Google or OpenAI, with a good salary, a clear career development path, and widely recognized social status.

Even so, do you still want to start a company?

Many first-time founders start without a clear understanding of what entrepreneurship really means. Jensen Huang, the founder of NVIDIA, recently said that if he could do it again, he might not choose to start a business.

Once you start a company, you will think more carefully about whether to embark on entrepreneurship again than the first time—this is also why second-time entrepreneurs usually only restart when they have a truly special idea.

For second-time entrepreneurs, the biggest risk is the 'rich exit syndrome' (calling in rich). When things get tough, they might think: if I don’t need to do this anymore, why should I put myself through this suffering?

Successful entrepreneurs often possess a special 'charisma' that convinces investors that they are strong enough to endure the various hardships of the entrepreneurial journey. Therefore, before you decide to pitch to venture capitalists (VCs), take a look in the mirror and ask yourself: do I really want to go down this path?

If you can truly understand this, persuading yourself to start a business should be more difficult than convincing investors. But if you are fully determined, your investors will definitely feel it.

When you deeply desire to do this, that determination will naturally show. This also leads to the second point...

Trait 2: You have an undeniable determination.

Most outstanding founders do not start companies because they 'want' to do so, but because they 'must' do so. It is a heartfelt impulse, not a rational choice.

The term 'wantrapreneur' exists to describe this opposite. Wantrapreneurs are those who choose to start a business because they think entrepreneurship is glamorous.

This heartfelt impulse will manifest in your daily habits and emotions. You will find that even during 'breaks', you are thinking about the details of entrepreneurship. Your browser history may be filled with searches related to your company. Your friends and family may start to find you annoying (see above regarding silently enduring hardships). You will be trapped in a 'maze of ideas' and even live in the future—those future images are almost as real to you as the present.

When I started my first company, Genome Compiler, I had this experience. At that time, I was doing a postdoc at Stanford, and biology was gradually moving towards digitization. The thought of staying in academia, doing pipetting experiments in the lab, made me feel like I was about to break down. I had to be involved in driving the future development of technological biology, and I had an idea to help achieve this goal.

Later, a postdoc from the neighboring lab really quit to start a company—this was when I first realized that entrepreneurship was something I could truly pursue. From that moment on, I knew I had to do it.

The best founders can see the possibilities of the future. They feel anxious when reality does not match the beautiful vision they have in their minds for the future. In their minds, they have already constructed one—or even several—paths to that future.

This is why I like to say that entrepreneurship is like a 'wormhole' to a different reality. You must follow that wormhole to the future you are creating for yourself and others.

If your desire for something is so strong, you will know it yourself, and your investors will feel it too.

Trait 3: You genuinely care about others and your cause.

Most founders have heard of 'founder-market fit', which is whether your expertise and skills match the market you are in. But I believe there is a deeper layer: you not only understand this market, but you also genuinely care about it.

Some people can perform well in a job they do not care about, which, although unfortunate, does exist. However, if you want to start a company, you cannot be that kind of person. You must deeply understand and care about the 'why' behind what you are doing. This is particularly evident in the biological field, where we often see some people are involved to cure diseases affecting their family or friends.

If you truly care, you will be willing to put in extra effort, thereby surpassing your competitors. You will distinguish what constitutes a true breakthrough from mere incremental improvements. And frankly, if you really care, you will find this work very interesting.

This is actually the first step in building a company with competitive barriers. If you care more than others, you will beat them.

Naval Ravikant once said: through your authentic self, you can stand out from the competition.

But at this point, many people often lie to themselves or investors. Maybe you can convince yourself (and your investors) that you care about something for a few years. But in a long-term partnership of 7 to 10 years with venture capitalists, you cannot keep pretending.

This obsession does not fade over time. You can accept that your company occupies 100% of your attention because... it has already taken up all your mental space.

Don't 'fake it until you make it'—instead, directly become the person worthy of success.

Trait 4: You are the core of the team.

One of the keys to attracting venture capitalists is to demonstrate that you can be an excellent leader. We need to feel that you are the one we must invest in. We want to confidently recommend you to other investors and feel proud to connect with your company.

This allure is very subjective and hard to define clearly in a manual. But I believe this intangible trait comes from a deep and multifaceted capability. You can not only grasp the big picture but also pay attention to details, showcasing comprehensive abilities.

You can maintain a good grasp of the big picture. You can examine your pitch from a macro perspective, plan financing and business plans strategically, maintain company operations, and push product development.

You can also handle details well. If someone emails you, you can respond quickly, provide deep insights, and cover enough details without getting bogged down in minutiae.

If you can do both of these things, you not only have a grand vision but also demonstrate practical execution capability.

It’s like the quarterback in a football game. The quarterback is the core figure of the team; they not only need to know where the ball should go but also have the ability to deliver it accurately in critical moments—even if only a few seconds are left to score.

The elusive trait:

  • Trait 1: You have unwavering perseverance.

  • Trait 2: You have an undeniable determination.

  • Trait 3: You genuinely care about others and your cause.

  • Trait 4: You are the 'core quarterback' of the team (symbolizing leadership and overall control).

Showcase yourself, not just your company.

If you have a clear goal, an excellent team, and outstanding technology... you may be surprised to find that raising funds is not as hard as you imagined. But if you ignore your core role in this story, you may encounter many obstacles.

Many founders do not realize that during a pitch, you are not just pitching the company, but also showcasing yourself.

If you are continuously rejected—the problem may not be your idea but rather the investors' perception of you. This feedback is often hard to accept, so usually, no one will tell you directly. Moreover, not every investor’s judgment is necessarily correct. Different investors will have different views of you. You cannot please everyone, but that’s okay. Find the investors suitable for you and keep pushing forward.

But if you can take some time to re-examine it from a different angle, this is actually just a new way of looking at your pitching process.

Possess those elusive traits, become that indispensable person. Then show us your traits, so we believe you are the best candidate.