Testing for the Intangible –

There’s a certain twinkle in the eye, an unreasonable optimism. It’s an intangible quality that doesn’t come up on a resume. But that hasn’t stopped venture capitalists from devising tricks and other techniques to determine if an entrepreneur is hungry enough. Here are some of the characteristics they’re looking for and how they look for them.


An entrepreneur must be confident that the technology he and his team have developed is the solution the market’s been waiting for all these years and that the future can’t happen without it. His attitude should exude confidence. Takashi Kameda worries when it doesn’t. Kameda is the vice president of venture investment operations for Itochu Technology Inc. He makes strategic investments for Japan’s largest technology distributor and must ensure that all the technology he invests in fits the needs of the Japanese market.

In meetings with entrepreneurs Kameda will often insist that the technology under consideration won’t work in Asia or that it needs major tinkering. It’s a trick question that he uses to test an entrepreneur’s confidence. “The purpose of this trick question is to show whether the entrepreneur did his own due diligence on the Japanese market and to show whether he has enough confidence in himself to get into the Japanese market with his own technology,” he says.


Confidence, though, is not enough to build a company on. It takes a driven personality that can make things happen by sheer force of will. One venture capitalist asked the chief executive of a digital media company to close a six-figure deal with a major advertiser before he would commit. This was before the company’s technology was even ready for launch. Nonetheless, the CEO signed on a major movie theater operator and then inked a deal with investors that net her company $14 million.


Hard work and long hours are the hallmark of passion. Investors notice the time stamp on an email and whether the reply to an email sent on Friday is dated Sunday morning or Monday afternoon.

Once, an entrepreneur seeking funding for his second startup came to meet with two San Francisco-based investors. His first company produced a windfall for the same group of investors, and it seemed the deal for the second company was done before the meeting even started. But then he handed over his new business cards. The VCs saw that he had moved from Salt Lake City to Silicon Valley. Curious, the investors asked if he had relocated his family. It turned out that he still lived in Utah with his family but the new business was in the valley. That broke the deal. From Utah, he could only be a manager, not a team leader available at all hours.

Another serial entrepreneur was at dinner with a group of venture capitalists looking for a round of startup capital. Over appetizers, he mentioned the new ranch he’d bought, and by the time the entree was served, he’d lost the interest of the investors. There was no longer anything at stake, one venture capitalist says. The entrepreneur had cashed out the first time around-his finances, reputation and future were no longer on the table. He was more interested in skiing than putting in the hours and energy to build a new company from the ground up, the investor says.

It’s still a gut feeling more than anything else, but when millions of dollars are at stake, hunger and passion can be quantified. Without a base level way above normal, there’s no deal.