A great idea is one thing. An idea that makes investors flock is another. What makes a potential backer willing to invest? Suzy Ryoo knows what makes a business bankable—as a partner at venture firms Atom Factory and Cross Culture Ventures, she manages a portfolio of innovative companies that includes Lyft, Gimlet Media, Spotify, Wonderschool, Seed and Thrive Market, to name a few. Below, she reveals what she looks for in a business worth betting the farm on.
Bankable can mean a lot of things-it can mean a company worth a billion dollars, or it can mean funded by a few angel investors. What does it mean to you?
We’ve invested in nearly 100 companies in more than 10 years between our angel investments at Atom Factory, and 3-year-old capital fund Cross Culture Ventures. Through those years, we’ve invested in founders who are at various life stages of company building from ‘profitable with a small team’ to a ‘global scale moonshot business’ The team, capital and resources required to run both of those and everything in between are different, and the types of investors who are interested and equipped to support such companies are for sure different.
Does more capital mean a better chance for success?
Not all businesses are meant to raise loads of capital. Capital is a means to an end. It’s important for every entrepreneur to recognize that when they take an investor’s capital, new expectations are introduced. You need to think through how that capital is put to use towards the agreed upon needs and milestones for the business.
When you’re evaluating whether or not a company is worth investing in, what do you look for?
First answer: the team. Who is the founder or co-founder of the business? Sometimes companies are formed without products launched, but why is this the team, or why is the founder the best fit for this business?
I look for a combination of the founding team, the market opportunity and problem they’re solving, and how they’re going to approach that market. And timing: why now? Why does the team have a burning need and desire to solve this problem?
Aside from potential earnings, what gets you excited about a venture in the beginning?
Clarity of vision. When a founder is able to express a certain clarity of vision, it’s striking. They’ve spent time thinking about the [problem in the] market, how they’re tackling it, the team needed to solve it, and the vision of the outcome of solving that problem. It’s important to have that clarity, combined with a relentless and intentional execution towards solving that problem.
If a company is pre-product, they could have tested the market with a minimum viable product. They could have gotten data back from an initial execution. Or they could have spent the last few years in a tangential space, but have clearly thought about the issue, and left the comfort of their job because they have such a desire to solve this problem.
Where do new founders most often get ‘stuck’?
There are always challenges. There are daily fire drills that prevent from prioritizing the most important problems to solve. No matter if early stage or growth stage, hiring a team and finding awesome talent is perpetually an issue. And capital, unless you’re running a company profitably and you’re not requiring capital, finding sources of capital and finding backers that believe in the same mission can be difficult, especially if the team is unproven.
What about fear?
Fear is a healthy emotion. It’s important in any business to have a healthy dose of fear. But it’s important not to let fear control your behavior or dilute your vision. It’s important to remind yourself to force yourself into being able to think outside of the fear. That could be by surrounding yourself with people that are fearless and learning from them. And ‘surrounding’ could mean physically, or reading articles and listening to podcasts. Ultimately, fear is a very personal thing and it takes personal commitment and action to work through the things in your own mind.
What are three takeaways you would tell budding entrepreneurs in launching their business?
One, invest in yourself. That includes a commitment to discipline, focus and self-care. Two, recruit a tribe of mentors and peer mentors that have your back because entrepreneurship at all stages can be very lonely. And three, take big swings. Dare to dream bigger. Have a long-term vision but short-term plan to be able to accomplish that long-term vision.