Inside the minds of investors, and their betting secrets

L-R: Hiro Maeda, Allison Baum, Dave McClure, and Steve Leonard discuss investment tips and tricks.
Photo credit: Tech in Asia / Michael Holmes.

Wanting to make the world a better place, and an idea about how to do that may be good enough for a startup founder to get working, but for investors – the guys that take it upon themselves to use cash and sweat to turn that idea into a legit business – it takes more than unbridled passion.

In fact, it takes the exact opposite of unbridled passion, some would say. Investment decisions, especially in early stage startup ideas, are a fine mix of finding the right entrepreneur, a scalable idea, making bets on the future, and hoping it all works out.

Contrary to popular thinking, for Dave McClure, founding partner of 500 Startups, it is also about making sure the bets aren’t too focused on changing the future, as much as they are on improving existing solutions. Dave, along with Allison Baum, managing partner of Fresco Capital, Steve Leonard, CEO of SG-Innovate, and Hiro Maeda, partner at Beenext, discussed investment tricks and tips at the Tech in Asia Tokyo 2016 conference.

1. Global, frugal

Photo credit: StockSnap.

Most moneybags have a playbook they like to stick to, and those metrics change with each firm or investor. For Allison, the best way she thinks a startup can be investment-worthy is to build a global business.

“Our approach is that global companies make more money. We came to that thesis from our own experience as entrepreneurs. Everyone says global companies are great, but we also know how frisking hard it is,” she says, speaking at the conference.

Dave would want his picks to have low capital requirement for the first couple of years.

“Many VCs are investing in disruptive models, but what we do is not invest in something that will win the future but what will better the past. If we see a company that is copying another model but making improvements on it, we like that.” he said.

If you’re looking to win some government approvals, think ecology. Steve who invests in startups on behalf of the Singapore government, said his backing is for companies that are thinking of solving global issues for the urban population.

“We don’t have people we have to return money to, so we do take a long term view and are more ecologically oriented,” he shares.

2. Team vs idea

Photo credit: Pixabay.

3. Where’s your worry?

4. Shake those hands