Know Your VC
"Markets Win" vs. "Founders Win", and why it should change how you run your process
“Markets Win” vs. “Founders Win” is a classic debate in venture capital, assuming a company is at least post-product.
If a VC is a “Markets Win” archetype, the thinking goes that they can back an “ok” team going after a massive market with real tailwinds and still end up with a multi-billion-dollar outcome.
If a VC is a “Founders Win” archetype, it’s the opposite. Great teams will themselves into a great company, pivoting as many times as it takes to find what works. YCombinator calls this founder-market fit.
I was talking with a founder recently about their fundraising process, and it hit me that this framework could help them run it more efficiently. If he knew which type of investor he was talking to, he would know which deck version to present (e.g. technical vs. not), how quickly to respond to emails and at what length, and more. Call it KYVC: know your VC.
The “Founders Win” archetype. Anecdotally, this is the most common type at pre-seed. They’re usually generalists, and more importantly, they’re investing at a high clip. That means they’re screening thousands of companies, and their attention is scarce. Simplicity is crucial. Response time should be fast. As a founder, one way to mirror this archetype is to show that you’re operating at a high clip, too. Back-to-back meetings, a tight process, quick, decisive answers. This type of VC is not looking for you to prove the market. A wasted meeting would be spent on why the market is ripe for disruption, and none on team, your unique backstory, and how your background uniquely brought you to starting this company. They’re looking for you to show you’re the kind of founder who operates at high velocity.
The “Markets Win” archetype. These are the VCs worth getting to know well ahead of when you actually raise. They’re placing a real bet on the founder too, of course, but they tend to be thesis-driven and investing at a lower clip, maybe half the volume of a high-velocity seed fund like SVAngel or YC. They do deep diligence on the market, and they care about your long-term vision for why you specifically are the one to back in a winner-take-all category. Expect longer emails with deep diligence questions. Match that energy: reply with real thought (quickly, if you can), or, better yet, get on a call and go deep with them live. Done well, it starts to look less like a pitch and more like an early co-founder relationship. These are also often the investors who offer more than capital and network, like engineering or GTM support, and regular working sessions.
What all great VCs have in common is that they look for founders with high product velocity. During the fundraising process, you should be signing on new customers, bringing on high signal advisors / angels, and signaling that the train is leaving with or without the VC’s check.
Know Your VC
Don’t guess. Read the signal early. A generalist who’s moved fast to a second meeting is telling you which archetype they are. A VC whose first email is three diligence questions deep is telling you too. Adjust your pace and your depth to match, not the other way around.
The mistake I see most often is founders running a single process for every investor: the same length of reply, the same cadence, the same level of detail, regardless of who’s on the other end. It could work in some regard – backing into the VCs that match your default mode. But if you want to run an efficient process, it’s worth knowing which VC archetype you are speaking with. Long emails sent days later could read as slow to the high-clip investor. An artificially rushed process could read as negative to the market-driven investor.
Know who you’re talking to. Then adjust accordingly.