As I progress in my journey as a Women Investor Track Fellow at Dorm Room Fund, Week 2 has been a particularly enlightening experience. One key takeaway has been the power of cultivating strong relationships with founders to gain a deeper understanding of a company’s trajectory.
I am particularly inspired by Mark Suster's principle, "Invest in Lines, Not Dots." - evaluating a company's long-term trajectory rather than focusing on isolated successes. Here are the key reflections:
Consistency and Growth: To accurately evaluate a company’s potential, it’s crucial to assess its consistent progress and growth over time. Isolated successes might be impressive, but they can be misleading. True potential is better understood through sustained performance and incremental improvements. Consistent growth offers a more reliable indicator of future success.
Relationship Building: Developing and nurturing long-term relationships with entrepreneurs is vital. These connections provide a more profound understanding of their evolution and capabilities. Genuine relationships enable investors to better gauge the true potential of founders and their ventures.
Holistic Evaluation: A comprehensive evaluation requires looking at performance trends over time rather than on single achievements. Understanding a company's trajectory offers richer insights than examining isolated events or metrics. This holistic approach is essential for assessing long-term potential.
Trust and Insight: Ongoing engagement fosters trust and yields deeper insights. Relationships built over time offer a clearer understanding of the business and its potential. A robust network of relationships enhances the investment process by providing a more nuanced and informed evaluation.
Investing in "lines" – or the ongoing trajectory of a company – rather than "dots" – individual successes – provides a more accurate picture of a startup's potential. Building meaningful relationships that offer valuable insights and contribute to the long term is essential for effective investing.