Ramtin Naimi

And it's very hard to discern whether that person truly wants to build a company in that category or whether that person just wants to be a venture backed founder.

And they know that there is capital available for this category right now.

Oftentimes, I'm looking for signs of novel thinking.

So it's either needs to be one of the first one or two times I've ever heard this company pitched to me before, or it's getting pitched to me with a completely brand new perspective.

A perspective that I haven't heard before that I think means that this person actually truly thought about what they were trying to build.

specific idea is less important to me it's more about the founder's understanding of the idea it's very easy to understand how thoughtful someone has been about anything just by questioning them there are certain founders you ask questions to their answers lack depth their answers lack substance and you end up in these situations where i'm like even when i ask you the question the answer still isn't a real answer and i actually feel like you even know the answer

And then there's the other founder who you'll ask a question and they can give you a 15 minute long answer to every question you ask.

He's either been asked this question five times before, he's asked himself this question 10 times already and thought about every angle to it.

Not saying that that's absolutely necessary, but at least it shows to me that they came to this with like a first principles mindset and they truly have thought a lot about building this specific company.

At the end of the day, I do try to look 18 months in the future if this company does well.

How many investors do I personally know that'll be interested in leading a follow-on round of financing for this company?

If it's a company that three tier one funds have already led a series A or series B financing in, most of their tier one funds are going to be more interested in falling onto one of those companies than the new company.

So then there are certain times where maybe it's a mistake where I just believe a category is too saturated and the odds of success, the risk reward ratio isn't quite there.

It's basically pretty simple.

If there's multi-stage funds around the table, the deal will get done no lower than 25 and it'll probably get done no higher than 50.

If it gets done higher than 50, it means one multi-stage got really excited and just turned it straight into a series A, at which point it's not really a fit for me anymore.

And that does happen.

The 50 is something I should have taken into consideration because every venture capital firm has a portfolio construction model.

And my portfolio construction model says that I want to own eight to 10% of 60 companies at seed.

And I want to maintain that 10% ownership and the best 10 of those companies through series B. I have assumptions for what my entry valuation needs to be into these companies.