Pinion Blog
Three Questions I Ask Myself in the First Meeting
What do I look for at the seed stage? Three questions: do I understand the business, do I believe the founders will fight through brick walls, and can this 100x my money?
I had an introductory call with a founder this morning. He's raising for a very early-stage company and somewhere in the conversation he asked an excellent question to help him position his opportunity with me: what do you look for in an investment this early?
Three things!
1. Do I understand the business? Yes or no.
Not "could I learn it." Not "with enough research, would it make sense to me." Sitting on the call, listening to the pitch, can I explain back to the founder what the company does, who it's for, why they'll pay for it, and how it makes money? If yes, we keep going. If no, I'm the wrong investor.
This isn't a comment on the founder or the opportunity. There are entire categories of business I don't understand well enough to evaluate at the seed stage — I got a pitch last week on a deep biotech product and was way above my head. I happen to know a lot about cybersecurity, but I've seen these kinds of deals be misunderstood by lots of investors. Knowledgeable investors back those companies all the time, but knowing what's outside your circle is part of investing seriously, especially this early when there's almost no data to fall back on. If I can't underwrite the business model in plain English in real time, I'm guessing, and at the seed stage guessing is just charity with extra steps.
2. Do I believe the founding team will fight through a brick wall to be successful?
Early-stage companies are a long sequence of brick walls. The product won't work the first time. The first customers will churn. The original thesis will be wrong in some important way. Money will get tight. A co-founder will leave. A bigger competitor will appear. The market will move. None of these are exceptional events — they're the job. The question is whether the founders are the kind of people who run toward those problems and figure them out, or whether they're the kind of people who write a polite update explaining why things didn't work.
You can't fully tell from a single call. But you can tell something. You can tell whether the founder has thought about what would have to be true for the business to fail. You can tell whether they've already faced one of the early walls and pushed through it. You can tell, in their voice, whether they're describing a company they're going to build or a startup they're going to try.
We are betting on people at this stage, not on plans. The plan will need to be adjusted. The people are what carries through.
3. Can the opportunity 100x my money?
This one sounds aggressive, but it's actually the most mathematical of the three. At the seed stage, the realistic outcome distribution is brutal — most investments return less than they cost, a few return modestly, and the entire portfolio depends on a small number of outsized winners. If the realistic ceiling on a deal is 5x or 10x, the math doesn't work. Even if the company hits its ceiling, the win is too small to carry the losses elsewhere in the portfolio.
So I want to be able to look at the deal and see a credible — not guaranteed, just credible — path to a 100x outcome. That means the market has to be big enough, the business model has to be ambitious enough, and the founder's vision has to be large enough to support that kind of return if everything goes right. If I can't construct that story from the materials in front of me, the deal isn't a fit for the asset class, regardless of how much I like the team or the product.
This is the question that filters out a lot of perfectly good companies that just happen to be the wrong shape for angel investing. There's nothing wrong with a business that's going to be a profitable $20M-revenue company in eight years. It's just not a great angel investment.
That's it
Three questions. If all three are yes, we keep talking. If any one is no, we don't.
When I look back on deals I regret making, more often than not, it's because the answer to one of these three questions wasn't "hell yes," and I overlooked it because I loved the founder or the business idea.
Track the investments that make the cut
When a deal passes all three questions, you want to track it carefully — entry valuation, ownership stake, how it's performing over time. Pinion is a portfolio dashboard built for angel investors who care about the numbers. Try Pinion free →