Can those of you who work on VC or growth equity shed some light on how you really gauge a founder’s ability to raise future money? I know a big part of it is background, so maybe talk a bit about how you size up or down somebody based on their background. Is it more education weighted (ie Ivy League or Top 5 business school)? How about experience - do you also look for brand names there? How do you gauge somebody who’s gone to good schools but done stuff of the beaten path, so didn’t work in MBB or say megacap PE before?
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Big misconception - Ivy League pedigree or brand name experience doesn't equate strong ability to raise capital as a founder. People can surely debate that a Stanford grad or someone with Big Tech experience may have an upper hand and to some extent that is true in the early days of a startup. However, in VC/Growth, we even back founders with no college degree and/or technical background if they have solid industry experience or exposure (former sales exec building a sales enablement software, former restaurant worker building a timestamp software), etc.. and realize the massive opportunity to build something - they can prove this by showing a proof of concept, large addressable market, other technical co-founders/employees who can build the platform, and a customer base that needs a solution. As a matter of fact, our fund prefers to back founders with industry experience vs traditional consulting/finance/tech backgrounds. Brand name education and experience can only take you so far as to build some credibility or build alumni connections - raising tier 1 capital entirely depends on your ability to build a scalable team and product and go after a large market as a passionate founder (strong education/work ex establishes solid work ethic and qualifications but being a founder is a completely different ball game)
I've done everything from seed to growth. I'd say the only situation in which a brand name tangibly helps is if the founder joined a rocketship early i.e. first product/BD hire at ~10 employees and helped lead key initiatives as employee count / ARR scales by many multiples. this kind of background and strong references is one of the best signals of operating excellence short of having successful exit outcomes as a prior founder
GSB, McK, Google, etc. will never hurt but are really just calling cards to help get in front of investors but will never seal the deal one way or another
Honestly, easiest way to raise Tier 1 VC is to be a second-time founder (with ideally a successful exit)
We don’t care about founder background as long as they’re coachable / accepting of input. The metrics of their company are far and away more important, if you get those down pat subsequent investment will follow
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