Two Founders Pitch The Same Idea To An Investor. The Second Gets Backed, The First Gets Jack. Here's Why

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Photo: BAD RABBIT INC via Flickr

A prominent New York entrepreneur and investor sat down with us over coffee today. He’s backed a number of NYC tech startups, and we asked him how he decides which companies are worthy.Two companies recently pitched him the exact same business idea. 

He and his partners passed on the first team.  This team had first-mover advantage and at the time of their pitch, their rivals did not yet exist. 

The second team came in and blew his partners away.  They could not back the company fast enough and the deal was done within a week.

Why did this happen?

It wasn’t that he and his partners didn’t like the first founder.  They liked him very much.  It’s not that they liked the second one more, although they liked that team too.

What really sold him on the second company and made him pass on the other was the vision of the founders. 

“The first company clearly just wants to be a mobile app,” he told us.  “The second wants to be an actual company.  Instead of having to pay Verizon and AT&T each month to use their data, these guys want to eventually be paid by Verizon and AT&T to have their technology on their phones.  Much like Safari or texting.”

Investors invest in people, but they’re also investing in the dreams of the people. So dream big.

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