When it comes to investing in startups, taking a nontraditional route can often lead to the best results. Just ask Zach Coelius, the managing partner of Coelius Capital, who started off as an entrepreneur before venturing into angel investing and eventually becoming a solo general partner (GP) in the world of venture capital (VC).
Key Takeaway
Building strong relationships with founders can lead to better investment opportunities than solely relying on connections with VCs.
Focus on Founders First
If you aspire to become a VC, it may seem logical to try to build connections with other VCs. However, Coelius suggests a different approach. Rather than solely targeting VCs, focus on building relationships with founders. Most entry-level investors approach VCs for deals, but without a strong network or substantial capital to contribute, accessing the best opportunities can be challenging.
Coelius suggests taking the time to make friends with founders and offering them assistance. By supporting them during critical moments, such as fundraising or product launches, you establish a valuable connection. When the time comes for a potential investment, founders are more likely to consider including you because of your previous support.
Be Genuine in Your Interactions
While networking is crucial, it’s essential to maintain authenticity in your interactions with founders. Coelius advises against turning these relationships into strict agreements with a quid pro quo mindset. Founders don’t want to feel obligated or indebted to you. Instead, focus on building genuine connections based on mutual respect and trust. Keep it casual, and let your actions speak for themselves.
Leverage Your Reputation and Expertise
As a solo GP, you may not have the backing of a VC firm or an extensive network. However, you can still leverage your reputation and expertise to attract founders and gain their trust. Coelius emphasizes the importance of showcasing your knowledge, experience, and track record as an entrepreneur. Demonstrate your understanding of the startup ecosystem, and highlight any successful exits or ventures you’ve been involved in. By positioning yourself as a valuable resource, founders will be more inclined to engage in discussions about potential investments.
Collaborate with Other Investors
Although you may be operating as a solo GP, collaboration with other investors can be highly beneficial. By joining forces with strategic partners, such as angel investors or smaller VC firms, you can pool resources, share due diligence, and tap into their networks. Co-investing with others can significantly expand your reach and increase the likelihood of accessing high-quality deals that would otherwise be out of reach as an individual investor.
Investing in startups as a solo GP requires a combination of networking, genuine interactions, leveraging your reputation, and strategic collaborations. By focusing on founders, building strong relationships, and positioning yourself as a trusted partner, you can overcome the challenges of being a solo investor and enhance your investment opportunities.
