Finance Geek

Reid has a guest post on Techcrunch today where he lists his three rules for investing in internet companies.  Armed with this framework he says “After five minutes of a pitch, I know if I’m not going to invest, and after 30 minutes to an hour, I generally know if I will.” - which is a little more efficient than we manage!

His rules:

1. Every net entrepreneur should explain how they will rise above the noise to attract a massive audience, how they will get to 1m and then 10m users.
2. They should have a unique value proposition, backed by a product which is sufficiently innovative to distinguish itself from the pack, but not so forward thinking as to alienate the user.
3. A capital efficient business plan.

I (along with everyone else) rate Reid highly as a thinker and have linked to him twice before, but this is the first time I have seen a full framework from him.  Further, they are all great points that can sometimes get forgotten.

It is tough to split them, but I particularly like 2. - because for me product is the most important thing.  As I said on a panel at the excellent Geek’n’rolla conference yesterday all the great web startups have had fantastic product and if I was forced to invest in a startup which had only one of the three attributes above I would definitely choose the one that had a unique value prop/great product.  There is at least a grain of truth in the old maxim that if you have focus on building fantastic product the rest of the business will look after itself.

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This entry was posted on Wednesday, April 22nd, 2009 at 7:09 am and is filed under The Equity Kicker. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.