Startup Investor School Day 2

Caldwell recommends defining an investment budget, deciding how many companies to meet, and working backward from the number of investments you plan to make. He uses a $500,000 annual budget and five investments as an example, suggesting the investor qualify a wider pool rather than meet too few or too many companies.

Investors should decide in advance what matters to them, such as the team, market size, traction, relevant expertise, or deal terms. Different criteria help investors find companies others overlook. Caldwell advises reaching a clear yes or no, communicating promptly, and honoring a commitment once made.

Caldwell says meeting founders in person can help investors build conviction. He recommends starting with basic questions about the company, team, progress, fundraising, and terms, then following up on the points that could change the decision. Afterward, investors can consider whether they trust the founders, feel more excited, and would work through difficult periods with them.

Caldwell asks investors to think of the meeting as a founder interviewing them for the role of investor. He cautions against distractions, making the meeting about oneself, overwhelming founders with unsolicited advice, or sending unnecessary introductions. If the answer is no, say so directly; if it is yes, explain the commitment and promptly send the money.

In a sample meeting, Caldwell asks Necto’s founder to explain its ISP software, its operating service in San Francisco, and its early evidence: 47 customers and two prospective franchisees. In Q&A, he discusses financing risk, competition, milestone-based investments, and learning from past decisions. He says investors can use private information to inform their judgment while generally keeping it to themselves.