Usually, a VC that has invested in a particular sector has a particularly high bar for their next investment in that same space. Once you’ve gone deep in one area, you’re exposed to all the non-obvious challenges and hardships associated with that market segment, which can make you very pessimistic and picky.

Sometimes, it’s easier to invest in a market where you have some knowledge but don’t know all the gruesome details — after all, it’s nice to have some level of ignorant optimism. I think this is particularly true in the adtech space. You see investors dive deep into adtech, make some investments that are pretty successful, but then pull out just as someone else enters to take their place. The same is true for commerce and transactional marketplaces… Both markets are areas where success can be found, but they are also very competitive and have particular challenges (e.g. the capital intensity of e-commerce, bad exit multiples, challenge to get a marketplace flywheel going, etc.).

Thus, I think it’s tough to pattern-match based on sectors. However, I do think it’s pretty successful to pattern-match based on founders.

When an investor finds success with a particular founder profile, they tend to be enamored by founders of a similar ilk. I’ve had multiple conversations with investors who say something like, “I really like this company, the founder reminds me of (insert name) when he/she started (insert successful portfolio company).”

Investing in startups is a personal business, and as someone who is going to be spending a lot of time with a founder, investors tend to gravitate towards similar profiles.

What this means is that the types of founders an investor has backed — rather than just the types of companies — give a strong clue as to the people the investor will gravitate toward. Sometimes, this means that the investor ends up doing things that seem out of their typical norms until you notice the similarities of the founders that break those norms.  For example, even though NextView is a primarily US-focused firm, I’ve made a number of investments in founders based in Western Europe that are very design-froward, product-centric entrepreneurs. Pierre Valade and Maxime Germaine fit this mold. 

Similarly, my partner David loves founders with a very strong muscle around marketing, and being super scrappy and creative about early-stage go-to-market tactics. I can meet a founder and immediately know that this is the kind of person Dave will love.

This idea of “founder-matching” goes beyond the CEO to broader teams as well. Does the investor typically only invest in companies with pretty senior/experienced technical co-founders? Do they typically like a sales-oriented senior member of the founding team? Do they typically like teams that are distributed or ones where there is a very long shared history? Different investors have certain preferences and risk tolerances for teams that tend to persist over time. You should never change what your team looks like for investors, that would be the tail wagging the dog, but you can prioritize your time with investors based on what their clear preferences might look like. 

So, if you’re doing your diligence on investors, don’t just start with the sectors where they appear active. Look at successful founders in the portfolio first — that’s where the strongest pattern-matching tends to happen.