Denzel Walters is Associate Director at Optima Partners and Compliance Advisory and Strategy Lead at Community Growth Ventures, which works to invest in and support startups led by underrepresented founders. He spoke to us at length about his views on investing, and what underrepresented founders need to consider when approaching investors.
We highly recommend listening to the full conversation below:
But if you’re looking for some fast wisdom, here are the three main takeaways.
1. Investors, don’t be lazy
Denzel: “Investors, we are just quite lazy. We look at pitch decks, the average time spent on a pitch deck is two minutes. So within two minutes, we're gonna say yes or no. I think you do have to spend more time to go and find companies, enough time to understand their markets. You have to put in the work, you can't be lazy about it and say, we want to invest in data founders, or women founders, and then not do anything about it and expect it to turn up.”
2. Founders, educate your investor and look for investor-founder fit.
Denzel: “Think about messaging and positioning. There is a gap, a knowledge gap: I've got this business, I've got this amazing opportunity, how do I package it in a way that I can help educate the investor about the amazing opportunity, right? Because that also is a skill. And when you're a diverse founder, especially if you're then trying to solve an issue that's either community focused, or its gender focused, you have to communicate it in a way that people can help close their knowledge gap and make them feel comfortable in this investment.
I think there's investor-founder fit, and there's investor-market fit. As a founder you need to close that investor-market fit so they can understand that market, right? The specific issue that you're trying to solve for that end user needs to close that gap in understanding. And I think that's where diverse investors come in, investors that have the knowledge of that market already, whether it's your personal experiences of peers, experiences of those around you, and an empathy for the founder and the experience and journey that they're going through. That’s investor-founder fit. And being able to understand that a lack of knowledge on something doesn't mean that you're not capable. It just means you don't know."
3. Pay attention to the details, and have a process when investing.
Denzel: "Get your legals in order...Don’t skip due diligence. Spend some time, write a memo, get your thoughts out. Always understand what you think the key challenges are, barriers to scale, barriers to getting to the next round, and where you can help and add value. Start to formulate a process, like a mental model or framework for how you look at businesses. But also trust your gut, because sometimes businesses don’t fit our mental models. It’s an art and a science."