“I PREFER INVESTING IN MISSIONARIES”

Bong Koh worked for a traditional venture capital firm based in the Bay Area and cofounded three start- ups before launching KohFounders, a Chicago- and Los Angeles- based early- stage investment fund. He spoke with HBR about how he sizes up founders. Edi

Q: Do entrepreneurs overestimate the importance of the business idea they’re pitching relative to the way they present themselves?

A: I 100 per cent believe that they do. Although the business idea is obviously very important, I tend to filter out ideas and markets I’m not interested in before deciding whether to even take a pitch meeting. In the earliest stages, when you’re an angel or a pre-seed investor, there isn’t a lot of information about whether the business will gain traction. You have to take an educated guess about whether there’s a market, and you have to evaluate the other aspects of the pitch. A lot of it comes down to ‘Do you believe in this team?’ That’s first and foremost for me once I’ve decided something is a market opportunity I want to explore. I want to know if the entrepreneurs are willing to grind it out.

Q: This research suggests that a calm demeanour is more attractive to investors than passion or energy. Do you agree?

A: I actually prefer high-passion, high-energy entrepreneurs. People who start businesses are either mercenaries or missionaries, and I prefer investing in missionaries – people who really believe in the pain point they’re solving.

Q: How important is an entrepreneur’s willingness to be mentored?

A: I can’t make a company succeed. Any investors who say they can are arrogant.That said, I do look for people who will be good partners, who are open to feedback. If people get too defensive when receiving feedback, it can be challenging to work with them.

Q: How hard is it to assess these traits in a single pitch?

A: I try not to focus too much on how the entrepreneur pitches. Just as there are people who excel in job interviews but make horrible employees, there are people who are really good at pitching but are not necessarily good as operators. I try to spend a lot of time with an entrepreneur outside the pitch setting before I invest. That’s one of the reasons I do not invest a lot in the Bay Area – deals can move very quickly there, so it can be hard to spend a lot of time with a start-up before reaching a decision.