What Do Investors Look For?
The Orange County Business Journal asked Senior Partner Chris Van Dusen: What do investors look for?
His take is featured in the OC50; the Journal’s annual list, put a spotlight on businesspeople involved in certain trends.
It’s kismet Chris would contribute to this issue, as this list showcases rising entrepreneurs in OC. Two of whom are listed are Solyco’s portfolio company founders.
Congrats to Kyle Kamrooz Founder of Bonus Homes and Vic Merjanian Founder of Titan HST- Titan Health & Security Technologies, Inc!
Read more about his take and our partners below.
OC LEADER BOARD | Opinion, Analysis, Insight
What an OC Investor Looks For
Editor’s Note: The Business Journal’s issue this week highlights 50 rising entrepreneurs who have successfully raised finds and/or started companies (see page 1). We asked three OC-based investors what they seek in entrepreneurs.
The Buffalo Charge
By Chris Van Dusen
Cows run away from the storm while the buffalo charges toward it- and gets through it quicker. Whenever I’m confronted with a tough challenge, I do not prolong the torment, I become the buffalo.
—Wilma Mankiller
From my experience, how founders approach these challenges often determines the success of their business. These entrepreneurial storms are conditions they must overcome, and they don’t go away if you try to avoid them or stay just barely ahead of them. If you try to run, like the cow in Wilma’s metaphor, you remain within the storm even longer instead of blowing through with strength and an ever-improving business strategy to see daylight on the other side. I once worked with a founder whose company faced a serious cash flow crisis. Instead of avoiding the issue, she rallied her team, laid out the harsh realities and collaborated to find solutions. She not only faced the problem but also inspired everyone to face the storm together. This leveraged their combined capabilities, grit and innovation to achieve the best possible solution. Together, they tightened expenses, renegotiated vendor contracts, and launched a new product feature that brought in critical revenue. It was a grueling period, but because she faced the storm head-on, the company emerged stronger and better positioned for growth. We look for companies that solve great problems with unique ability to disrupt incumbent systems or verticals. An entrepreneur’s job is three things: vision, culture and fundraising with a P.T. Barnum-style flair. A great entrepreneur has an unbridled commitment to mission and is the biggest advocate for what they’re trying to do. He or she has an unwavering belief even when people say it will never work. Great entrepreneurs know about the problem they are solving and have clear vision to get it over the finish line. They understand how their products will change the world. However, too many founders say their solution can solve all problems that might be true, but they don’t know. It’s a mile wide and an inch deep strategy, which makes me skeptical. Focus on where you have expertise and then scale into new industries. When raising capital, an entrepreneur must prove to me why we’d allocate dollars there as opposed to somewhere else. They must know the TAM and what the company can achieve in the next three to seven ears. We don’t invest in pre-seed startups; our focus is on early stage companies with strong growth potential. The entrepreneurial journey has been romanticized in our culture, but it’s extremely hard. So many don’t understand what it takes to do. Startups typically fail not because they run out of money but because the founders gave up. That’s why I love investing in second- and third-time founders. When someone has gone through it once or twice, they know what they are signing up for. That persistence—grit—is what I’m trying to find. In Orange County, we invested in a couple of amazing entrepreneurs who are on the Business Journal’s list this week: Vie Merjanian’s Titan HHS and Kyle Kamrooz’ Bonus. See the special report for more details on their remarkable companies.
Chris Van Dusen is the Huntington Beach-based senior partner for Solyco Capital, which has invested $380 million in the past seven years.
The views and opinions expressed in this essay are solely those of the author and do not necessarily reflect the official policy or position of Solyco Capital. This content is for informational purposes only and should not be construed as professional advice or an official statement from Solyco Capital or its affiliates.
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