Mini Essay: Structuring the Founder Coffee Chat

My takeaways after my first month working as a VC

The process at the venture capital firm I am working at is as follows:

A deal is brought in. That leads to a 1st coffee chat with a partner(s), a 2nd coffee chat with a different partner(s), and finally, an investment committee consisting of a full live pitch to all the partners after the due diligence process.

Disclaimer: We are a pre-seed/seed stage firm, and this is my first month working in an investment role. The ideas below are completely my own, and I am sure they will change as I continue to work in this role. After all, I am learning in public.

I want to preface this by saying that these are not necessarily outright questions I am asking. A coffee chat with a founder should feel like a natural conversation and less like a Q&A/interview. The following outline concerns the questions and themes I am trying to bring to light naturally throughout the conversation with the founder(s).

The 1st Coffee Chat

The overarching question being answered: Is this the team that can solve this problem?

I structure my coffee chat notes in the following style to answer this question.

Outline:

[Startup Name]

[Startup Description]: 1-3 sentences describing the startup based on their submission to our data center.

Golden Rules of Speaking with Founders: Keep top of mind while chatting.

1. Your entire attention is directed to the founder during this call.

2. They are the experts here; treat them as such.

3. The founder’s job is 100x harder than the investors’. Maintain this humility.

[Story] Who are you, and what led you to want to solve this problem?

I want to understand how their path in life has led them to be the singular person(s) who can solve this problem.

[Problem] What is the problem without any technical jargon? Why do you want to solve it?

I should have a fundamental understanding of the problem and a better idea of the convictions behind solving it.

[Solution] What is the solution without any technical jargon? What unique insight do you have to solve it in this manner? Why is your solution the one that will solve this problem?

I aim to understand that this team has a unique way of solving this problem that no one else has thought of/attempted/executed before. As such, the problem and their solution in their most distilled form should be clear to me without having to be an expert in their field.

[Vision] What is your thesis on this space — what does the future look like, and how are you a part of that future?

I want it to be clear that this team has spent significant time envisioning the future. While they are certainly not there yet, they have a clear picture of what that future looks like and how they will still be around in 5-10 years, showing they have the potential to be a venture-backed company.

[Team] What is each member’s role and skill set? How did the team meet, how long have they known each other, how long have they been working together? How is each member complementary to each other’s strengths and weaknesses?

Here, I hope to better understand the team’s dynamics, working and non-professional relationships, and how they have positioned themselves to execute in the manners that best serve the company and each other.

If these questions are answered by the end of the first coffee chat, I should understand whether this team can solve this problem, execute its solution, and ultimately be the team I want to work for. After all, at the pre-seed/seed stage, so much of the evaluation and investment is a bet on the founders.

The 2nd Coffee Chat

The overarching question being answered: Is this the startup that can solve this problem?

While at the pre-seed/seed stage, some of these data points will often be difficult to truly assess and will change as the company grows, it can reveal how thoughtful the founders have been in planning to build around the following.

Outline:

[Startup Name]

[Startup Description]: 1-3 sentences describing the startup based on their submission to our data center.

Golden Rules of Speaking with Founders: Keep top of mind while chatting.

1. Your entire attention is directed to the founder during this call.

2. They are the experts here; treat them as such.

3. The founder’s job is 100x harder than the investors’. Maintain this humility.

[Market/Competition] What is the TAM/SAM/SOM, and how did you get there? Who are the other players, and how does your offering differ?

This explores how they sized the market and confirms that it can lead to venture-sized returns. Furthermore, they should understand their competitive landscape and how they will win.

[GTM] What is your ICP? What channels will you use to acquire customers, and how scalable are they? What is your distribution insight?

Quoting Julian Shapiro of Julian.capital and DeepChecks.vc: “If you build something good, often they will simply not come.” I want to understand the unique approach to scalably getting in front of customers and acquiring + retaining them. Most startups die because they can’t figure out how to grow them.

[Business Model] How will you generate revenue, and what is your pricing strategy? What are your key costs, and how will you achieve profitability? Is your business model scalable, and what adjustments do you foresee will need to be made as you grow?

Self-explanatory. Arguably not as important as most likely this early in the process, this business model will change.

[Product] What is your MVP, and how does it solve the problem? What is your product development roadmap, and how will you iterate based on user feedback? Are there any technological barriers or IP considerations?

This highlights the startup’s ability to solve a real market need, understand its target customers, and highlight potential technological advantages or barriers. Deeper due diligence can often garner more insights if your background is not in this founder’s area.

[Traction] Do you have any early adopters or pilot customers, and what has been their feedback? What key metrics/KPIs demonstrate your product’s potential for growth? Have you achieved any significant milestones or partnerships that validate your concept?

This aims to provide concrete evidence of market validation and the team’s ability to execute its vision while offering insight into growth potential and customer adoption.

[Fundraising] How much capital are you seeking to raise, and how will it be allocated? What is your projected runway, and what milestones do you aim to achieve with this funding?

This should detail the startup’s financial planning and resource management skills, which are crucial for a founder. Furthermore, it can provide insights into the founders’ long-term vision and strategy, building upon the vision section in the first CC. Finally, this can help us understand if the investment aligns with our criteria.

It is also worth mentioning that I do not adhere rigidly to these templates. There is often a lot of overlap between the content in both CCs, so I tend to keep my notes flexible and write in the direction of the conversation's flow.

Next Steps

After successfully completing the two coffee chats, enough information should be collected to begin filling out an investment memo and ramping up the diligence process. With a significant picture of the team and startup painted, the investment committee brings in the founders to answer its most dire questions and assumptions and vet as a team whether this investment makes sense for the firm or not.

Cheers - Kieran