When evaluating an investment, we focus on these three priorities:
No. 1: The Founders
No. 2: The Market
No. 3: The Product Vision
We also consider this sage advice from Bijan at Spark Capital on what he looks for as an early stage investor.
“For me it’s four things:
- Are the founders extraordinary?
- Do I love the product?
- Is the vision compelling?
- If I wasn’t a VC, would I want to work for the founders at the startup?
"The times I’ve made mistakes in this business is when I’ve wandered from it.”
For us, the simplicity of this framework is a North Star. We've also honed a more comprehensive checklist that we consider. We're not dogmatic about every point, but they are good reminders as we explore an opportunity.
Argon leads or co-leads “pre-seed” rounds. “Pre-seed” means a stage early in your company’s journey, very often pre-revenue, and probably even pre-product. We love to see functional prototypes! We have a track record of also investing literally at company formation. We look for founders with special insights about markets and industries, unconventional points of view, or who bring an unfair advantage in a particular domain.
Our fund strategy is based on higher ownership concentration, so a first check will typically be between $250K and $500K. Every startup has unique resource needs, so your company might only require $500K of financing at this stage, or maybe as much as $2MM to $3MM. We're flexible to amount and structure. Though we will invest through SAFEs and convertible notes, we believe the clarity of a priced equity round is beneficial to both investors and founders.
Through our co-investor network we can often bring a majority of fundraising capital together for your round. And we work closely with you as the founder/CEO to build a strong syndicate of co-investors, including other venture funds, angels and direct investing by family offices. Together, through this collaborative model, we've often seen rounds oversubscribed, but we'll guide you not to take too much money at once.
Getting to a Yes
For a first meeting, Andy or Bob will have a direct 30-45 minute conversation with you as a founder. We prefer to review a deck or other materials ahead of time so we are prepared with questions and can offer some immediate, actionable feedback. The purpose of this initial conversation is to better understand your answer to the question of “Why?” -- Out of everything you could do with your life, why this? Why now? Why with this team? How do you plan to translate this energy to your market? And what do you want to build that people will love?
One of the key questions we consider is whether we think you will want to work closely with us, and whether we will want to work closely with you. We love rolling up our sleeves and being helpful, drawing on our decades of operating, advising and investing. We can honestly say “we truly love our portfolio companies” and spending time with the founders and teams. We believe they value the close interaction with us, too.
We review new opportunities at least once a week, where we share with each other our personal perspective. We'll often ask the other partner to review the materials and notes to gauge their level of interest and to kick off our internal deliberation.
We strive to get back to you in a week on next steps. We're certainly not perfect, so we don't mind if you ping us as a follow up!
After our first internal discussion, if we're mutually intrigued, we'll make an introduction to the other partner so they can schedule a second conversation so we can create a holistic understanding of your business. Behind the scenes we will often start doing high-level research to better understand competition and other market dynamics.
We want to be respectful of your time, so if after these first conversations one of us isn't super intrigued and thinking deeply about your future, we will give you a quick “No”.
Of course, when we say “No”, that does not mean that you don't have huge potential ahead of you. We just may not care deeply about the problem you are trying to solve; perhaps we have battle scars that blind us to what is different now; or maybe we don't feel we can get educated enough and provide authentic value to help you grow a massive business. And, we admit, sometimes we just get it wrong!
In the time of COVID, we have found success building strong, respectful relationships with founders like yourself through Zoom. This often occurs through the process of assigning mutually beneficial "homework," remote collaboration on strategy documents and/or making introductions to potential partners, customers and talent. We want the time you spend with us to be helpful to the advancement of your business. This can range from providing product UX feedback or review of a technical roadmap. It can be sharing our experience launching new products and applying those lessons in a bespoke manner to create a unique GTM strategy for your business. Maybe we can simply review a job description. Let us know how we can be helpful and let us use the process to get to know each other better. It's just as important for you to build trust in us as we want to build confidence in you, your team, market and product strategy.
As a unified partnership, we always agree to invest in your company together. There is no "Bob Deal" or "Andy Deal." That doesn't necessarily mean we will have equal conviction, but rest assured, when we make a commitment, we're all in!