Launching, growing, and managing a business from the ground up requires much more than a good idea.
Sean Brown knows this better than most. A self-made entrepreneur before he finished high school, Brown has seen plenty of good ideas fail to gain traction — including some of his own. But the lessons learned from those experiences informed an even bigger idea when Brown started GO VC, an early-stage venture capital firm in Irvine, California. We spoke to Sean Brown to find out how he identifies a good investment, red flags that come up during due diligence, and how founders can damage their long-term prospects with short-term thinking.
How do you gauge the value of an investment?
Sean Brown founded GO VC to help startups with good ideas that needed more than just funding to succeed. By providing enterprise-level support and marketing expertise, Brown can look for pitches that resonate beyond a purely fiscal level. “The financials, business plan, and organizational structure all need to make sense, and obviously there needs to be growth potential to generate a return,” Brown said. “One of the top differentiators these days, though, is the human connection. I like entrepreneurs that are good investments as people, not just based on what’s in a report or slide deck.”
When you evaluate a business plan, what’s the most critical element you look for?
Through GO VC, Sean Brown meets with startups, portfolio companies, and other business owners seeking funding. Making the right decisions — and learning from the wrong ones — has required a mix of intuition, skepticism, and financial savvy. After more than 15 years of active investing, Brown said pitches that are realistic and self-aware have the best chance of moving forward. “For me personally, one of the biggest turn-offs is a forecast or projection that is clearly overhyped,” Brown said. “Part of working together is having a shared vision, and if you’re making unrealistic promises about growth, that’s a red flag right away.”
How do you feel about founders taking money from a stock sale prior to an exit?
Because of the risks inherent in early-stage ventures and seed funding, Brown’s list of red flags to look for is long. While most are covered in the due diligence process, Brown says some entrepreneurs’ choices can indicate a broader misalignment. “Everyone’s circumstances are different, but when we invest, we’re typically looking at a long-term plan to create growth and value for a return,” Brown said. “Someone who’s looking to recoup capital early in the process is sending a mixed message to investors, and employees and stakeholders too, honestly.”
Do you provide any accelerator strategies or tactics as an investor?
Business incubators and accelerators have been in vogue recently because they appear to have established a template for startups pursuing success. Brown agrees that accelerators can be valuable for the right businesses, and he’s organically adopted a similar strategy for his own investments. “Many entrepreneurs are more focused on developing their product or building the right team than creating an infrastructure that can sustain their success,” Brown said. “GO VC’s experts provide a lot of the same services as an incubator or startup accelerator, but that’s because we’re actively involved in guiding and supporting growth.”
Is investing a difficult or stressful business to be in?
A hands-on approach to growing early-stage startups seems like a recipe for overwork, with stakeholders’ needs pulling you in a dozen different directions at once. But having a supportive wife and two young children at home keeps Brown grounded and grateful in the face of an intimidating to-do list. “I know it’s a cliché, but I’m doing work that I love, so it doesn’t really feel like work, even when I’m putting a lot of time in,” Brown said. “My family is happy, I can set my own hours and choose who I do or don’t work with — the benefits definitely outweigh the downsides. I couldn’t see myself doing anything else.”
How do you win?
Given his multiple exits and portfolio of successful companies that includes GO VC, one could assume that Sean Brown is the competitive type. He admits that he can be aggressive when the opportunity calls for it, but he says that’s usually due to timing, not a desire to claim victory or elevate his company’s profile. “I don’t spend a lot of time thinking about each ‘win,’ because a win implies an ending, or that something is over,” Brown said. “We want GO VC to keep moving forward, not stopping to admire what we’ve done so far. Even when we’re exiting or concluding a partnership we’re looking for other places to re-invest and push those resources into new growth.
