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Timing  

 

When’s the right time to approach TinkBig about investing?

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It’s never too early to reach out, but it can be too late. We’re usually a startup’s first investor. In fact, most of our 30+ companies came to us when they were a couple people and an idea, having raised no capital before they met us. So, even if you don’t think you’re ready, we’d still like to get to know you. Maybe we can even help in the meantime.

 

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What if I’ve already raised some money from angels , is it too late to talk to you?

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Of course not. While we’re usually the first money in, we’ve worked with a number of teams that raised a small friends and family round before coming to us. That said, if you’ve already raised more than a few million dollars, we’re probably not a fit.

 

 

 

How We Make Decisions  

 

Does TinkBig only invest in particular areas or industries?

 

No. We don’t think VCs predict the future — founders do. And we look to founders to teach us what’s next.

 

Yes, our investments tend to cluster around internet & mobile startups across many sectors, including e-commerce, payments, marketplaces, mobile applications, and SaaS platforms. That’s not where our curiosity ends. If you’re building something different, we still want to hear from you and learn about the vision of the future you have in mind.

 

 

 

How do you weigh different criteria in your decision-making process?

 

The biggest factor in our decision-making is always the founding team.

 

How innovative, resourceful and resilient are you? What’s your superpower? Why are you going to be the ones to prevail where others won’t? What in your history shows that you thrive off the beaten path? Of course, we evaluate product and market too, but to be honest, we mostly look at that to evaluate the strength of founders too.

 

Looking at what you’ve done already for this company  and before in your career  gives us a record of hundreds if not thousands of decisions you’ve made to get you where you are today. And that’s what success lives or dies on in this industry: the ability for founders to make really quick, good decisions. We want to understand how you do it, and we give that a lot of weight.

 

 

What does Tink Big look for in an idea?

 

Above all, we look for compelling and contrarian insight into how the world works. What do you understand about a market or a need that no one else does  that other companies in the space get wrong? And why is your company the most likely to win at addressing this gap?

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Second, if you have a product in market, a small group of passionate early customers is a strong indicator for us.

Several years ago, we heard a handful of our founders raving about a new business intelligence tool called Looker. We reached out to the company and invested. If there are people using your product or service who wouldn’t know what to do without you, we want to hear about it. That’s one of the strongest data points you can offer. As an extension of this, we want to see creative thinking around go-to-market strategy as well as product. The best startups take both seriously.

 

Third, we take a close look at the market you’re going after. Let’s say you win the whole thing. Is the prize worth winning?

The game is long and hard, and some markets are more rewarding than others. SaaS companies have a different range of opportunities than on-premise software makers. First-party retailers are valued very differently from third-party ecommerce sites. To mix our metaphors, before a founder starts building their castle, they have to make sure they’ve picked the right piece of land.

 

 

What do you look for in a founding team?

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Building an enduring company is ridiculously hard. You have to overcome inertia, have an unbelievable amount of conviction, and be willing to drive through brick walls. You can’t wait for someone to hand you a roadmap. You can’t even wait for a roadmap to come into focus. You have to be able to draw it yourself and execute at the same time. This is an exceedingly rare set of skills — and it’s what we seek to find in every founder conversation we have.

That’s number one. Then there’s all the typical stuff: integrity, credibility, market understanding, learning ability, etc. But there are a few other things we haven’t seen written about or discussed to death that end up mattering a lot:

 

1 ) Delayed gratification. Being a founder is a constant, grueling exercise in deferring happiness and victory. The most successful entrepreneurs

are willing to sacrifice in the short term for long term impact. When we consider working with you as a founder, we look for your willingness to make these tradeoffs earlier in your life and career. Did you skip spring break to pursue a long-term project? Did you work while you were in school? Have you built anything that took months in heads-down crunch mode to make possible?

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2 ) Admit unknowns. We’re always meeting the same two types of entrepreneurs. The first thinks they’re expected to know the answer to every question. So they’ll make sure they have a definitive response always, even if they shouldn’t. They’ll tell us their pricing model. Why they’ll be competitive with Google. What will cause customer churn in three years. Whenever we try to address potential risks, they tell us they don’t exist. This is not our ideal type of founder. The second type of entrepreneur will answer questions when they can, but when they don’t know, they say so. When asked the same question about pricing, they might say, “Well, we’re considering a few different options depending on the outcome of some tests we’re running.” When asked about the cost of customer acquisition, their response could be, “We don’t know what our numbers will be, but here’s our model based on comparable companies.” When asked about the risks, they identify several  and engage us in discussion about how to handle them. The founder who volunteers their ignorance has far more credibility. No one expects a pre-launch company to have all the answers. In fact, it’s a red flag if you think you do. Don’t sell us on being 100% correct. We’d much rather understand how you’re attacking the market, evaluating the risks, and taking on unknowns.

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3 ) Good storytelling. All successful founders can deliver a compelling narrative. They have to be able to sell against the status quo. They have to convince investors and employees that this incredibly unlikely thing they’re doing is about to take the world by storm. They have to capture media attention, keep their board aligned and energized, and consistently bring new customers into the fold. If a founder can’t tell an amazing story, it’ll be hard for them to do any of this. If you’re interested in developing these skills, be sure to read The Seven Deadly Sins of Startup Storytelling, Transform the Way you Give Presentations and How to Tell a Story When Raising Capital.

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4 ) Founder-market fit. We’ve lost a ton of money betting on seasoned enterprise founders pursuing consumer ideas, and vice versa. This doesn’t mean that our decision pivots on domain expertise , it means that a key part of our process will be determining whether a founder is capable of succeeding in the field they’re headed into. We need to hear a good argument.

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5 ) Rate of execution. Great founders move very, very fast. So if we meet with an entrepreneur over six weeks, we’re watching closely what they’re accomplishing at the same time. If the company’s been around for 90 days or 6 months, we want to see how much they’ve gotten done in that period. There are a ton of leading indicators there. We want to work with companies and founders that make great speed a habit.

 

 

Investment Process  

 

What is your investment process and how long does it take?

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These answers vary from company to company, but there are some basic steps everyone goes through. While we often try to move at the pace of the founder, an important rule applies: the less time we have to make a decision, the more conviction we have to feel about a company. Sometimes we spend months developing a relationship (which, honestly, we prefer). Sometimes we move from intro to close in under a week. Generally speaking, here’s what you can expect:

 

6 ) Initial review: Every startup that connects with TinkBig is reviewed by a partner. We have no junior members of our investment team, only partners. We’ll look at any materials sent by the founder, determine whether the business fits our basic investment criteria, and try to ensure it’s not directly competitive with any of our existing investments.

 

7 ) Initial meeting: Your first meeting (or phone call) will always be with a partner. We let the founder do most of the talking, and hope they use the opportunity to dig into the specifics of their team and business. This usually lasts 30 to 60 minutes.

 

8 ) Second meeting: Most of our “passes” occur after the initial meeting. If you’ve made it past that meeting, you’ll sit down again with your “point partner” as we both continue to learn more about each other. This is our chance to focus in on particular areas of the business where we have questions  and for founders to ask us more about TinkBig, what working with us is like, and what they could expect as a member of our community.

 

9 ) Follow-up: Our partnership makes all decisions as a team. So, we often introduce promising founders to another TinkBig partner for an additional conversation. We often like to introduce the founder to the partner who has the “most skepticism” about the company at this point  as it ensures that all questions are addressed and gives us the ability to probe more deeply into the core assumptions of the business for an hour.

 

10 ) Partner meeting: If these conversations go well for both of us, we’ll typically make some reference/diligence calls and invite you to meet with the rest of the partners at our twice-weekly investment meeting. Here, you’ll have about an hour to tell your story to the entire partnership and answer questions. Typically, we fund about half of the companies that make it to our partner meeting.

 

11 ) Final Decision: After your presentation, our partnership will discuss your company in great detail with the goal to give you a final answer usually within 24 hours of the meeting.

You can see more about our terms and how deal specifics usually work below.

 

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What’s the average round size TinkBig participates in?

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Most of the rounds we’re a part of range from $250k to $3M. No matter what, you should always consider raising enough to have at least 18 to 24 months of runway post-close. And remember, the best time to raise follow-on capital

is when you don’t need it. Raising enough for 2 years of runway puts you in this position.

 

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Will TinkBig only invest if it can lead the round?

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While we tend to lead most of the time, we’re not the lead investor about ⅓ of the time. We have a long track record of partnering with outstanding seed-stage VCs and angels. The most important thing (to us), is that we’re aligned with founders and have a meaningful stake in every company (so we can spend meaningful time trying to help the company win).

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We’ve found it’s in a startup’s best interest to have an active lead investor. We’re allergic to party rounds. In our experience, it’s in a founder’s worst interest to have a group of investors without a leader. When we lead an investment, we’re there for the founder, and ready to roll up our sleeves to help them get the job done.

 

 

Do you have a strict ownership requirements?

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No. Unlike some traditional venture funds who need 25 to 30% ownership requirements, we don’t. We like to own enough of the company to make sure that we can dedicate meaningful time and resources to helping you build. Our ideal ownership is roughly 7.5% to 15% after your seed round. Unlike most (smaller) seed funds, we’re unique in that we deploy the vast majority of our capital in follow-on investments, supporting our companies as they grow.