Great Team, Great Product, Great Space

This parody of venture capitalist email boilerplate by Harj Taggar of Y Combinator is hilarious, brutal, and by all accounts, accurate.

Like the VC world, the angel investing community has its own boilerplate language. Much of it has developed around writing company recommendations, the blurbs angels use to try and convince each other to invest in our deals. They tend to go something like this:

  • Great team in a huge addressable market with high margins.
  • Killer team with a great product in a great space.
  • Proven team that is bringing a killer product into a huge marketplace.
  • Amazing founders who really know the space well.
  • This team is crushing it and they’ve built an amazing product with market demand.

Boilerplate endorsements are generically positive and don’t convey the concrete reasons for investing. “Great team” sounds weakly subjective; “great product” is a given—nobody invests in bad products (although nonexistent ones are sometimes fine); and “great space” or “huge market” doesn’t hold water because almost any market can be made to look big on a platform with global reach like the web. Phrases like “crushing it” have become diluted from overuse.

Although counterintuitive, it’s actually quite rare for an angel to be able to articulate precise reasons for investing in a specific startup (i.e. saying yes to company Z but no to companies A through Y). Early stage startups are not subject to traditional forms of investment analysis, so decision processes often boil down to gut feeling, spider sense, or pattern recognition about people. Boilerplate language is then a side effect of back-filling with a logical-sounding explanation.

In the long run, it may not matter. The best and most experienced angel investors I’ve seen generally don’t explain their reasons for an investment. They have their own way of making investment decisions, which over time yields a track record whose performance speaks for itself, and then further investments need no particular justification. If pressed, they might say something about how much they love the founders—and that’s enough.