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How to Pick: Generalist or Specialist VCs

Jason Yeh
March 26, 2024

What’s the deal with Generalist and Specialist investors?

Pitching is the art of convincing others to believe in your dream, not just your business plan. After working in startups and gaining insights from my experience at Greycroft, I’ve learned a few things that could be helpful to you.

If you haven’t realized yet, investors come in all shapes and sizes. It’s a confusing mix not made any easier by the fact that investors often change their approach based on the market.

To get a better handle on this messy topic, I want to explain two types of investors that can confuse founders: the generalist and the specialist.

How different are they?

When it comes to investors, you will mostly encounter two types: generalists and specialists.

The obvious definitions of the two would tell you that Generalists are open to exploring various areas while Specialists focus on specific industries. Duh.

To get more sophisticated view on how each type will behave, it’s more important to ask why they’re different.

At their core, an investor makes strategic decisions like what to focus on because they think it will result in a higher likelihood of winning outcomes. For generalists, they have to believe they have broad access to great networks that will share amazing founders and deals. They also have to believe that they’ll be able to sense a good founder from initial materials and conversations so they can reach out to people in their network to get a more nuanced expert take on the business.

Specialists on the other hand will make the decision to narrowly focus because they have a broader belief in the success of a segment of the market. They believe that their narrow focus will send better deals their way AND allow them to more quickly identify a good opportunity. On top of that, there can be an easier sales pitch to convince a founder to choose a firm specialized in their industry over a generalist fund.

Should I act differently?

Should you customize your pitch based on who you're talking to?

I usually want founders to groove their pitch and make it consistent from pitch to pitch. That said, you should know your audience. While staying true to your story, it's important to make it resonate with the VCs you’re pitching.

When presenting to generalists, the universal hook is even more important and leading with simplicity is key. When communicating with specialists, you can still start with simplicity, but being ready to jump into juicier details can make a huge difference.

My experience as a Generalist

When I was an investor at Greycroft from 2012 to 2016, we were a generalist fund. Our portfolio was extremely diverse, ranging from online video to gaming to food delivery. This mix wasn't coincidental; it was our strength. We had an extremely large network combined with a great reputation for driving business for our investments. This ensured we got to look at amazing deals. And once we spoke to a founder, our investors got very good at sniffing out strong founders whose business ideas could be validated by our extended network of expert diligence partners.

Greycroft was very successful executing a generalist strategy. The interesting thing is just last year in 2023, Greycroft announced they’d become a more specialized firm, focusing on AI startups.

These strategies are not only confusing to founders…even worse, they can change quickly!

The choice: Generalist or Specialist?

At the end of the day, neither is better 100% of the time. You want an investor who understands your vision, aligns with your goals, and delivers real value. And this can come from many sources. Generalists may bring unexpected insights and connections, while specialists can dive deep into the specifics of your industry strategy. Be open to finding the right partner.

Key Points to Remember

  • Know Your Audience: Understand the difference between generalists and specialists, so you know how to engage and how they’ll evaluate you.
  • Simplicity is Key: Make your pitch clear and engaging no matter who you’re pitching
  • Choose Wisely: Consider which investors understand you the best and bring the most value

Be chased,

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