VC investor explains how he finds surprising startups by focusing on the founders' opinions instead of their initial product idea
- Reilly Brennan thinks it's a mistake for early-stage tech investors to focus too much on the initial ideas entrepreneurs have for their startups.
- Brennan is a general partner with Trucks Venture Capital, which invests in seed-stage and pre-seed companies that are working on transportation technologies.
- Other factors, such as the startup's team or the approach it's taking to the market, tend to be more important to its long-term success than its initial concept, he said.
- Brennan and Trucks try to focus on founders rather than ideas, he said.
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Reilly Brennan's venture-capital firm has a relatively narrow focus. When it comes to new investments, though, he tries to be as broad-minded as possible.
Brennan is a general partner at Trucks Venture Capital. As its name suggest, the firm, which was founded in 2015, focuses on startups that are working on transportation-related technologies. But Brennan and his partners define their mission broadly; Trucks has invested in companies doing everything from developing self-driving trucks to pioneering a system that heats washer fluid and uses it to clear windshields, headlamps, and sensors of dirt and ice.
He and his partners also try not to have preset ideas about what technologies they want to invest in, Brennan told Business Insider in a recent interview. They try not to go out looking for a company with lidar technology, for example, just because they may not have one in their portfolio, he said.
"There's a bit of a danger when you look for an idea first," Brennan said.
Trucks tries to focus on founders, not founding ideas
Part of the problem with such an approach is that it would bias him and his partners toward particular ideas and encourage them to ignore other factors that are important to startups' long-term success, he said. If they were single-mindedly focused on investing in, say, a strawberry-picking robot, they would be inclined to invest in the first entrepreneur who walked through their door that was designing one, he said.
But "it might not be the right team," Brennan said. "It might not be the right approach."
Trucks invests in nascent companies, typically ones that are in the seed-capital or even pre-seed stage. When a company is that early in its life cycle, the idea it starts with can morph, sometimes quite dramatically, Brennan said. If he and his partners were fixated just on the original idea, they might resist the startup's efforts to evolve or change it — or be left wondering why they're still involved in the company after the idea changes.
Instead of focusing too much on founders' initial concepts, Brennan and his partners try to focus on the entrepreneurs and their teams. Trucks wants to know how they view the world and how they think it will change.
"If you back founders" rather than ideas, "it's a much different relationship," Brennan said.
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Tuesday, May 21, 2019
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