After a long night of to many drinks of Founders Mindset and Essays by Paul Graham, I woke up with the following question: for what are early-stage VC firms really looking?

Let me put it more simply. An early investor is thinking about whether a founding team is capable of creating a transformative company. The “subject” is the founding team,and the “how” is the startup. Here, I’ll use a sort of consulting framework (sorry): does the founder have the will and the skill to create a transformative company?

The first thing is the will. ItS different for a founder to say, “I want to sell the best hamburgers in Santiago, Chile,” than to say, “I want to reverse climate change.” Why is it different? Sounds obvious, right? One sounds like BS; the othre like something real. Why is the desire to do something big relevant? As without it, there’s no extraordinary return. The venture capital business is about betting on 100 projects and hoping one delivers an extraordinary return. If they don’t invest in businesses they believe can be extraordinary, then the odds go from one in 100 to zero. but wait, maybe they don’t want extraordinary returns. Well, then it’s not venture capital; it’s private equity, a bank, your mom, your uncle, etc.

The problem is that it still sounds like BS. But is there any substance or reality to that rhetoric? I think so. More than a desire to reverse climate change, help overcome poverty, or connect all the people on the planet, these announcements reflect ambition. Ambition to do something big. They reflect a desire to seize that extraordinary chance.

So, the question for VCs then becomes: is this founder looking for something extraordinary? Are they going to pursue that opportunity to do something huge? Do they really want to d

The Everest Analogy for Early-Stage Investors

Early investors in startups aren’t just looking at ideas; they’re evaluating the team’s capacity to navigate immense challenges. A helpful analogy is climbing Mount Everest. The primary question for proxies – those who assess potential investments – is whether the team has “done it before.” This doesn’t necessarily mean successfully summiting Everest itself, but rather demonstrating a history of achieving ambitious goals.

There’s a distinction between those who have never attempted such a feat and those who have tried, perhaps reaching base camp. But a classic chicken-and-egg problem arises: proxies want evidence of prior experience, yet how can a team demonstrate that experience without initial opportunities? This is where the proxies become crucial. Perhaps the team hasn’t reached Everest Base Camp, but they’ve successfully scaled other challenging peaks.Or, lacking that, they’ve demonstrated a capacity for “climbing socioeconomically” – achieving significant progress through effort and strategic decision-making.

The message conveyed to investors isn’t simply about resilience and determination, though those are valuable traits. It’s about assessing the ability to tolerate uncertainty and make sound decisions under pressure.

This leads to the second key dimension early investors evaluate: the skill to make success happen.

What skills does a team need to build a startup? First is judgment.

Why Your First Investor is You

Starting a business frequently enough means seeking funding. But before you approach investors, understand a key truth: you are the first investor. This isn’t about money; it’s about commitment.

Many founders have brilliant ideas and are sure they’ve identified a significant opportunity. However, if they can’t clearly explain their vision and demonstrate their ability to execute, they’ll struggle to gain support. It’s a common problem.

Truly risk-taking investors want to believe in something. To earn that belief, you must show them you have the passion and skills to turn their vision into reality. One effective way to do this is by creating detailed, well-structured pitch decks. These decks should thoroughly explain your idea, market, and plan. But remember, a pitch deck isn’t the only way.

Ultimately, the very first investor is the founder. You invest your time,energy,and ideas into the venture. This initial investment of yourself is crucial.It demonstrates dedication and sets the stage for attracting others.