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Entrepreneurs: Stupidest Funding Criteria

by Miki Saxon

https://www.flickr.com/photos/fortunelivemedia/7587824160

Anyone who tracks the startup community hears stories of the stupid criteria investors use when deciding who to fund.

  • No strong accents or women with young kids or who are planning on having kids according to Paul Graham of Y Combinator (more on Graham tomorrow).
  • An anonymous investor who, although he considered the product and team brilliant, passed because the founder wasn’t Caucasian.
  • Age (way off base)

At a guess, I’d say that more than 90% of stupid turndowns are based on standard bigotry.

The other 10% fall in the Stupider category

  • Dislike of founder’s alma mater
  • Talk funny (Southern, Bostonian, New England, New York, Texas, etc.)
  • Grooming bias

Now Peter Thiel has added a new bias that is so silly it calls for a Stupidest category.

Don’t fund anyone wearing a suit.

A slicked-up entrepreneur is inevitably a salesman trying to compensate for an inferior product. Based on this perception, Mr Thiel’s venture fund instituted a blanket rule to pass on any company whose principals dressed in formal wear for pitch meetings.

There’s a basic problem with these kinds of rules.

  • No rule can be applied universally, without question and no exceptions.
  • Universal rules are just another form of bigotry—one size does not fit all.

But if a suit is a sign of “a salesman trying to compensate for an inferior product” then why does Thiel himself wear a suit?

Flickr image credit: Fortune Live Media

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