194. Startup Maxims: Invest in Lines, Not Dots? Investors Invest In Relationships.

VC Minute
What's really at the core of the "lines, not dots" maxim? Relationships. Mark Suster's classic post: Invest in Lines, Not Dots.

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A close cousin to ABF, Always Be Fundraising, is the classic Marc Suster phrase, “lines, not dots.” This is a great one and something I quote probably too often. If you haven’t heard it, the gist of it is that if we’ve met, once I have one data point on you and your business, a dot. If we’ve met twice, I can draw a line. The more data points, the stronger the line. Invest in lines, not dots.

The original post is from 2010, and I’ll put the link in… You guessed it… the show notes. It’s worth a read. In some ways, what he’s talking about is ABF, or Always Be Fundraising. His point is to meet with investors, get on their radar, and stay on it with updates. What he’s really talking about is building relationships. In fact, he compares it to getting married because once you take an investment, you’re stuck with those investors on your cap table.

But really, aren’t relationships at the core of all three of this week’s episodes so far? Seed investing is very much a relationship business. I cannot overemphasize that point. And that’s because the earlier your startup, the less data there is to go on, and the more that investors have to rely on other things.

There’s an old joke in the venture community that everybody before me on the cap table is a gambler, and everybody after me is a spreadsheet jockey. It’s sort of funny. But there is a grain of truth to it, especially at the seed phase. There is so little information to go on.

A good friend of mine who is a growth stage investor just blows his mind that we can actually make investments this early on in a company. He and his team of seemingly infinite analysts are drawing lines. They’re drawing charts and graphs, and they’re making lines. But they’re making different lines than we are at the seed phase.

If one of those lines is a good relationship with a strong correlation between what you say and what you do, you’re going to win out. Whether you’re asking for advice or actively ABFing, you’re putting dots on the chart for an investor, and they can’t help but draw lines.

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