This video is a panel discussion from TechCrunch Disrupt 2025 covering how early-stage startups (pre-seed and seed stage) can attract investment with nothing but an idea and the founder's vision -- no product, no users, no traction. Wesley Chan of FPV Ventures and Charles Hudson of Precursor Ventures share their insights on what they look for in earliest-stage founders and how to stand out with just an idea.
1. The Core of Early-Stage Investing: Founder Vision and Problem-Solving Ability
The panel discussion begins by emphasizing how critical a founder's vision and problem-solving ability are in early-stage investing. Wesley Chan recalls his experience at Google Ventures (now GV) making early investments in companies like Gusto, Flexport, Robinhood, and Plaid, noting that "there was almost no information" at the time. Instead, they looked for founders like these:
"At the time, we were looking for truly great founders. People who reminded us of Larry and Sergey, who had a vision that the world would change if their ideas were realized."
At that time, most ideas were at the "back-of-a-napkin" level, and what mattered was determining whether founders had deep insight into how they would change the world. For example, when Gusto's founders explained that "anyone could have a $4 payroll service," given the terrible payroll management experiences at the time, it was a truly remarkable vision.
2. The Importance of 'Zero to One' and Perspectives on Corporate Founders
Charles Hudson notes that about two-thirds of the companies he invests in are first-time founders, and he invests at the stage before product-market fit, before launch -- "before everything." He primarily looks for two things in early-stage founders:
- Founders who "know something special and unique about the problem they're solving."
- People with zero-to-one startup experience -- those who have worked at small startups of 25 people or fewer, who tend to be more successful when starting something new on their own.
Wesley agrees with Charles, noting that many people present grand visions but don't know how to get started. He states firmly that "I wouldn't invest in a founder who says they need investor help to run the business." He invests in founders who can clearly explain the zero-to-one phase and demonstrate the ability to scale from 1 to 100 and from 100 to a billion.
The perspective on founders from large corporations was also interesting. Charles warns that people who succeeded at big companies can struggle in a startup environment.
"They're great at navigating political dynamics, figuring out systems, and securing resources. But throw them in a room with just a whiteboard -- no executive team, no guidelines, no PRD, no OKRs -- and tell them to 'figure it out,' and they freeze."
Wesley also notes that corporate employees often overlook the distribution problem. Companies like Google already have enormous distribution, but startups must figure out on their own how to acquire 100, 1,000, or even a million users.
Charles emphasizes that founders from Meta or Google need self-awareness -- recognizing and accepting that all the resources they enjoyed at a large company (brand, infrastructure, distribution) won't exist at a startup. They also need a spirit that pursues "adventure" over "comfort."
"Do you want comfort, or do you want adventure? Because building a company from scratch is not comfortable. It's neither easy nor comfortable, but it is an adventure."
3. Unique Insight and the Pursuit of Monopoly
Wesley says that even corporate alumni can receive investment if they have a "unique insight that something is completely broken." He uses Canva as an example. Canva was rejected by 111 investors, but the founders had a clear insight into why existing design tools had failed.
"They basically said, 'People under 35 grew up with phones in their hands and are image-first. Phones have built-in cameras. The tools we were trained on, like Office or Photoshop, are text-first. It's called Microsoft Word, for crying out loud.' So they said they needed to build something that was design- and image-first."
This was an understanding that people wanted to design quickly and easily rather than spending four years learning Adobe tools. Wesley mentions the friction problems Google's existing video platform had when YouTube was acquired, emphasizing that he looks for founders with "unique insight into what's broken and the motivation to fix it."
Charles notes that about half his portfolio founders had hit specific problems at large companies or had projects they wanted to build get shut down, leading them to go independent. These are typically individual contributors, product managers, and engineers who "build things on the front lines, hit problems, realize the problem is bigger than their boss acknowledges, and leave."
When deciding to invest without a product or traction, Wesley prefers founders who "have clear insight and believe the world will change." Charles explains that meeting thousands of companies each year, he can tell within the first 7-10 minutes whether a founder has "novel insight" about a problem.
"Sometimes people present an idea to me, and as a generalist, I knew nothing about it when the meeting started. They tell me the problem, and my brain starts thinking, 'How would I solve this as a generalist?' If I don't learn something newer than what any smart person could reason through, I think one of two things: either this person hasn't studied the problem deeply enough to understand an interesting angle different from what ten other people pitched me, or this is a trivial problem where you can't build a big business."
Wesley adds the concept of "monopoly." Although "monopoly" is often seen as a negative word, he prefers to invest in companies with "natural monopolies or government-granted monopolies." For example, a biotech company's patents are a good example of a government-granted monopoly, and Google became a natural monopoly through its product itself. In a market with 40 competitors, prices converge to zero, and you can't control pricing or distribution -- which is why monopolistic positioning matters.
4. Overcrowded Markets and the Possibility of 'No Winner'
Charles is often wary of what investors call "red oceans" -- fiercely competitive markets. Sometimes companies do succeed in such markets, and in those cases, what matters is determining "what does this company understand that others don't?" However, in most cases, competitors are thinking the same things and pursuing the same distribution channels and business models, which makes him reluctant to invest.
Wesley cites examples like the 100+ video conferencing companies during the pandemic or the 15-minute grocery delivery companies on every block in New York City, warning that "overcrowded markets without monopolistic positioning may have no winners." These markets often "couldn't make money."
Charles mentions that despite Zoom having built-in recording, numerous meeting recording/assistant tools like Otter, Fireflies, Granola, and AOMA emerged successfully, showing that unexpected functional needs or differentiators can sometimes create a market. However, he generally recommends a cautious approach to overcrowded markets.
5. Founder Vision and Wisdom Over Specific Industries
When asked whether investors prefer specific industries, Wesley describes himself as a "generalist" who looks for "founders with unique ideas." He recalls his Canva investment -- he had no interest in the productivity software market at the time, but was captivated by the Canva founders' "unique vision, insight, and hundred-year plan."
"The best founders have a hundred-year plan and truly understand why they're building something because they believe the world will be fundamentally different in 5, 10, or 100 years."
Charles also describes himself as a "generalist" who "doesn't know what he'll like until he's in the meeting." He looks for "people with expertise" -- whether domain knowledge or problem understanding -- that allows him to learn something new.
"I always go into meetings thinking I'm going to learn something from this founder. And if what I learn is profound, I'll probably invest."
Wesley cites Robinhood's case, where the founders originally pitched an algorithmic trading platform for hedge funds but eventually pivoted to Robinhood and succeeded. This was possible because the founders were "extremely smart with a unique way of thinking about a specific domain," and he adds that "luck" also plays a role in investment decisions.
6. Views on Pedigree and Experience
When asked about the importance of pedigree, Wesley answers firmly: "It's zero for me." He explains that Canva's founders had none of the pedigree or credentials that Silicon Valley values, yet they succeeded because they "truly understood how to build something differently from the rest of the world."
"They didn't have a pedigree that anyone in Silicon Valley would care about. Mel was a high school yearbook teacher, and co-founder Cliff was a history teacher. They came from Perth, they never worked at Google or Facebook/Meta, and they didn't come through 20 startups."
He criticizes many investors for being fixated on pedigree and missing great founders. Canva succeeded by making "a tool that high schoolers and college students could easily use for homework" while Silicon Valley was saying "make money, do enterprise sales."
Charles describes pedigree as an "intellectual shortcut" that sometimes leads to good decisions but "often leads you astray." According to him, the main reason investors focus on pedigree is that it's "the quickest way to filter through noise among thousands of pitches." But he notes that easy doesn't always mean good.
"If you have thousands of pitches in your inbox, it's an easy sorting method. But easy doesn't always mean good."
Wesley says pedigree can sometimes act as "baggage." People with strong pedigrees tend to follow certain paths, but the best founders are those who "disrupt the status quo and try something completely new that was previously impossible." Pedigree often leads to fear of failure or risk aversion, pushing people toward the "easy path," which doesn't lead to "outlier outcomes."
However, Charles acknowledges that pedigree provides investors with "unfair access." Those from prestigious schools or large companies have social connections to investors, making it much easier to get pitching opportunities.
7. How to Reach Investors and Accelerator Programs
Wesley says he doesn't check cold emails and only takes meetings through recommendations from people he trusts. Even if a recommended founder is in a field he hasn't previously invested in, he'll take the meeting if he's "convinced the person is worth meeting." He also finds value in meeting interesting people and gaining new insights, even if he doesn't invest. He adds that he prefers meetings with founders he can "help."
"I never take a meeting where I can't be helpful to that person. Whether I can make introductions or give new insight."
Charles says he also takes most meetings through referrals but does check some cold emails, with success stories to show for it. He particularly values referrals from founders he's met but didn't invest in, since they understand his investment focus.
When asked how founders overseas or without connections can reach investors, Wesley emphasizes the need to "find a connection." Even Canva's founders connected with him through a founder in his portfolio. He candidly states he's never invested in someone through cold calls or walk-ins.
Charles describes YC (Y Combinator) demo day as "overwhelming," saying it was effective when there were fewer companies and higher signal, but not anymore. He currently views Neo and Entrepreneur First positively as accelerators. Entrepreneur First in particular has been a good pathway for finding founders who've experienced frustrations in Europe and want to move to San Francisco.
8. Founder Age and Wisdom
When asked whether founder age matters, Wesley says "genius comes from everywhere" and isn't constrained by age. He mentions investing in people like Tony Fadell (Nest founder, iPhone and iPod inventor) and Jamie Siminoff (Ring founder) -- older founders or serial entrepreneurs -- and values their "insight and drive."
The median age of Charles's portfolio founders is 29, but he says for younger founders, emotional intelligence (EQ) matters more than IQ. Since they need to build organizations and lead people, leadership and management abilities are critical.
Wesley explains that when evaluating founders, he looks for two things: "raw intellectual horsepower" and "wisdom." Intellectual ability is the capacity to react quickly to change, think critically, and forge one's own path rather than following trends.
"If you're following what everyone else is doing, you're a consensus company, and you're not really doing something different or ahead of the curve."
And wisdom is gained through failure -- through "scar tissue" and "experience" -- and refers to the discernment not to be swayed by trends or friends' advice.
"This wisdom is what we look for, and it's generally found in older founders or people who've been through a few scars."
He emphasizes that wisdom is essential for founders to make sound judgments among numerous stakeholders (employees, customers, investors), and it plays a very important role in investment decisions.
9. Audience Q&A: Equity Allocation and Investment Strategies
9.1. Early Equity Allocation
When asked what maximum percentage of equity should be given away in a pre-seed round from friends and family, Charles answers that "it's rare for friends and family plus pre-seed investment equity to exceed 15%." This is to maintain founder motivation through subsequent seed, Series A, B, and later funding rounds, and to provide sufficient equity for new investors. Wesley adds that "the best founders find ways to bootstrap and get done what they need to without raising a lot of capital."
9.2. Making the 'Zero to One' Pitch Concrete
When asked how to concretely deliver a "zero to one" pitch, Wesley says it's important to answer "Why will people buy your product? And how much will they pay? Is it really valuable to them?"
"The most important thing is 'Why will people buy your product? And how much will they pay?' Is it truly valuable to them? This is what Paul Graham instilled in everyone at YC. 'Make something people need!'"
He emphasizes the need to describe the "customer journey" in detail and demonstrate how enormously valuable the "pain point" you solve is. Today, various tools make it easy to create prototypes, which can provide evidence of product-market fit.
Charles notes that early-stage companies need to solve one or two "really hard problems," but people tend to solve the easy problems and neglect the hard ones.
"If distribution is the hard thing in your business, really think deeply about how you'll actually prove your distribution hypothesis is right. If there's a technical barrier, how will you make progress on it? But make sure with your first capital, you're actually working on the hard part, not the easy part."
Wesley cautions against founders who claim they "got interest or market fit without any marketing," saying this is just short-term attention that doesn't solve the ultimate distribution or monopoly problem.
9.3. Choosing Venture Capital
When a first-time founder starting an aerospace manufacturing company in the Midwest asks what to look for when choosing a VC, Wesley advises to "look at the partner, not the firm." Once an investor is on the cap table, they can't easily be removed, so choosing a trustworthy partner is critical.
"Look at the partner, not the firm. Once they're on the cap table, you can't remove them. When I decide to invest in a founder, it's like 'till death do us part, or IPO do us part.' You could be with that person for 10 years."
He also advises choosing an investor with "longevity" -- one who will remain in the industry for a long time. He points out that many former colleagues and junior partners leave the VC industry within a few years, and for early-stage startups, a partner who can provide long-term support is essential.
Charles adds that it's important for founders to figure out what they want from an investor beyond money.
"I ask every founder at the end of every meeting, 'What are you looking for from an investor besides money?' There's no right answer. This isn't a trick question. I generally want to know what this person is looking for. Are they looking for partnership, mentorship, support, or customer introductions?"
Clarifying these needs and finding the right investor to match is important, he explains.
Conclusion
This panel discussion emphasizes that for early-stage startup founders to attract investment, having a clear vision, unique insight, problem-solving ability, and strong determination is more important than anything else. Pedigree or connections matter less than the founder's intrinsic capabilities and wisdom, and there is a preference for teams with ideas that can build monopolistic positioning over those in overcrowded markets. The relationship with investors is long-term, so choosing partners carefully is also an important lesson. Ultimately, a powerful idea and the founder's relentless passion to make it reality are the core drivers of early-stage investment.