Thoughts on startups by investors that
fund them & entrepreneurs that run them

Movies, not Snapshots

Stopping by the First Growth Venture Network session today, I saw the usual great collection of startups and industry experts. It’s about the best forum for practical advice, mentoring, and support that an entrepreneur could hope to find.  As usual, there were lots of quotable quotes, but my favorite one today was from Jeff Bussgang, co-founder of Flybridge, who said:

“We like to invest in movies, not snapshots.” This is a fantastically pithy way of expressing a philosophy that both startups and investors should understand well. Just seeing a company at a single point in time makes it very hard to evaluate, regardless of how impressive the PowerPoint is, or how the founders explain their path to the present. Ideally, an investor should instead get a direct view of company’s trajectory over at least some period of time. Perhaps that seems obvious, but I think many entrepreneurs, and new investors, do not fully appreciate the implications.

For startups, understanding this mentality correctly can dramatically improve the funding odds. Here’s how. Your first contact with an investor (angel, angel group, VC, whatever) can go like this: “We aren’t ready to look for professional funding yet… but let me tell you what we’re going to do over the next few months”. Framing things this way makes the meeting infinitely easier to get in the first place, and to conduct in the second. You’ll establish a contact, get some early valuable feedback, and set the stage for very different conversations down the road. This approach also takes a lot of the pressure off the question of when, exactly, to reach out to the investing world: if you make it an ongoing dialogue, you should know when the moment is right… and have people ready to listen.

For angel investors, it’s a similar story. The best answer isn’t “yes” or “no” off that first contact. If you like the basic proposition, try: OK, sounds cool, what metrics will you use to measure success? And then: please stay in touch and let me know how you’re progressing against them. The trick is not to abuse this relationship—only engage this way if you think you really might invest should the story prove out. Remember, entrepreneurs talk to each other, too.

Some of the best startup stories I know have gone this way. Bootstrapping under a microscope might not be fun, but there are big benefits. If the performance is there, the investor is largely sold, and should understand that the deal has been “de-risked” a little, with a favorable implication for valuation. And even if things don’t go as planned, the investor can see how well the entrepreneur deals with challenges, and might just be impressed.



All opinions expressed are those of the author,  and do not necessarily represent those of Gust.

Written by Bob Rice

user Bob Rice Managing Partner,
Tangent Capital

Bob is Managing Partner of Tangent Capital, a registered broker-dealer and merchant bank focused on alternative assets and strategies. He is the resident industry expert on early stage and other private investments for Bloomberg TV, appearing daily as Contributing Editor on “Money Moves.” Bob is a Director of asset management companies with over $2 billion in AUM. Bob began his career as a trial attorney at the U.S. Department of Justice and then became a partner at Milbank, Tweed, Hadley & McCloy, where his practice centered on financial products. He left the law in 1996 to found a 3D graphics technology startup that eventually became the publicly traded Viewpoint, provider of the web’s first “rich media” advertising platform. He has been an active angel investor and startup mentor since 2004. Along the way, Bob also served as the Commissioner of the Professional Chess Association and authored the business strategy book Three Moves Ahead.

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3 thoughts on “Movies, not Snapshots”

  1. I like the analogy.

    Not specifically mentioned (but implied) is that long-term perspective requires patience.

    Both from entrepreneur and investor.

  2. That analogy makes a lot of sense. It’s the entrepreneur’s responsibility to make sure these potential investors start watching their movie from the beginning.

  3. Great – Movies, not Snapshots – Exactly the analogy we use to sell our tools to understand building energy performance.

    An operator sees a screen, but thereby only knows what’s happening now.

    In hospitals they take a patient’s history prior to diagnosis.

    Sick buildings require management which needs recognition of patterns

    Try to understand the plot of a movie from the billboards –

    It will never work !