I’m a big proponent in investing in founders. Years and decades down the line, a select few inevitably come up with products and services that will fundamentally change the way we live for the better. As such, these founders should reap a significant reward for moving humanity forward. However, in investing, as Warren Buffett has timelessly said, the first rule is to never lose money. Particularly in startup investing, to gauge who to invest in, we’d have to look at the founder themselves as a person. On some equity crowdfunding sites, users may ask questions and receive answers from either the founder or the founding team themselves. Consequently, the responses, including the contents of the answer, the tone of the answer, can give some clues to the potential founder. I came across a potential tech-based company of creating robots whose name shall not be mentioned. I will pose some screenshots to his apparent attitude. For example, display #1:

When a prospective equity crowdfunding angel investor is intending to ask, it is natural to be making commentary or asking about the valuation. However, this founder’s response did not make any sense. Replying with don’t invest if the valuation bothers you seems like a very aggressive way of stonewalling what could have been a chance at a showcase of the company. The founder could have referenced new developments, revenue growth, product enhancements, market expansion, etc.

Looking through the discussion section, let’s take a look at another selected founder response based on valuation:

Again, we see the same response from the founder regarding patents and valuation. The founder does not even attempt to address investor concerns, and seems to be letting his ego and pride get in the way. Any manner of reference to future potential patents, growth would have been sufficient. This has also seemed to have been taken notice by other investors. And of note, this seems to have gotten more attention from other investors, strongly responding:

To which there was no response to this comment, and similarly for another patent related question:

It’s very telling when a founder gets defensive, stonewalls, and ignores questions he doesn’t like. The four horsemen of the apocalypse started with criticism, leading to defensiveness, stonewalling, then contempt, and sustained over time, leads to the likely end of a relationship. It seems, investors and the founder may not have a good relationship if things get rough, and I shudder to think what would happen to the investor’s equity. I wouldn’t be expecting fair treatment or regular updates. Many of the world’s most successful angel investors and venture capitalists have suggested that the quality of the founder as a person is the most important criteria in determining the future quality and success of its startup. If that’s true, then right there and then not the greatest character is displayed.

Furthermore, in today’s increasingly competitive society, it’s rare to come across a company that operates in a truly unique blue ocean where there are no competitors or alternatives. However, this founder did not seem to list any competition whatsoever:

It’s shocking that no competitors or even competitor industries are mentioned. It is highly unlikely that a company could be this unique. Perhaps a lack of experience is at play here to believe that no competitors exist. Or, the next big thing is here. From my read, I would not be comfortable in investing in such a founder, and as such, would have to take a pass and keep looking for the next unicorn.

Disclaimer

This is not Financial Advice. This article is meant only for educational and perhaps entertainment purposes.