“What should I build instead?”

Every specialist fund, I suspect, encounters this sooner or later.

A founder pitches the idea to you. You know the space, you have heard variations on the theme a number of times. You express some reservations. You highlight some of the challenges that the startup is likely to face.

And then the founder looks you in the eye and says, “I agree - this might not work. What should I build instead?”

As legal tech heats up, and it becomes increasingly obvious that (perfectly in keeping with our original predictions) almost nothing about the practice and business of law is immune from transformation, this question is becoming more common.

So common, in fact, that I want to explain why - in most cases - it is not a question a VC can usefully answer after a brief pitch.

One of the key factors we take into account when assessing investment opportunities is founder-problem fit.

The easiest way to explain the concept is: “Why should this founder be the one to solve this problem?”

In many of the outstanding startups, the “affinity” between the founder and the problem is not superficial. “I have always liked law,” “I have always wanted to be a lawyer” or even “I practiced law” is typically not enough - hundreds and thousands of people could say the same about themselves.

What is it about this founder that gives him or her an unusual advantage in tackling this particular problem?

No, you need not have been the victim of medical malpractice and failed by your lawyers to build a medical malpractice legal tech solution. But there must be something distinctive - your perspective, your experience, your distribution - that creates the founder-problem fit. It may well be even more elusive than the vaunted product-market fit.

Do you see the difficulty?

A 30-minute call can give me some sense about your current product idea, and your founder-problem fit in relation to it. It tells me next to nothing about your founder-problem fit with another problem.

It is not that we at Grayhair Venture Partners do not have ideas about legal tech solutions that we hope will be built. We do. But - unless something in the course of the conversation has led us to conclude that you are uniquely suited to that particular problem - why would we send you on a wild goose chase?

We do have a list of problems that - we believe - need solving. We do not always know what a particular founder should build.

Question to other VCs: how do you deal with this question?

P.S. For the avoidance of doubt: I do not mind the question, I respect the founders who ask it, and I am categorically not posting this to humiliate or ridicule anyone. The goal here is to point out the danger of accepting that suggestion from someone (anyone) who does not know you well enough to understand what drives you and whether you will genuinely connect with the problem that they would want to solve...