Can an entrepreneur look worse to an investor by presenting consumer research in a pitch? Would an investor look down on a startup that developed Year 1 usage and revenue scenarios? Believe it or not, it is possible--and it is happening in VC offices that you might work at today or present in tomorrow. It's just another example of how some investors are so tied to old ways of thinking that they can turn positives into negatives. Not to fear, though, as founders have more choice than ever in seeking funding, and new-school investors have a growing opportunity to turn an innovator's dilemma into enormous potential. Like any good startup, I have spent hundreds of hours sharing my Minimum Viable Concept Test with potential customers--mainly Venture Capital investors who assess a large number of consumer digital services each year.  I've gotten a lot of positive feedback and leads in the pipeline to date, but the MVC Test has gotten a number of interesting negative responses, too. Some wonder whether or not consumer research can uncover "The Next Twitter"--something so new that people don't know they need it yet. My response is that Twitter is a rare breed that proves an exception; in reality, most startups address a clear, existing problem or unmet need (e.g. Dropbox, Airbnb, GroupMe, Shazam, Instapaper, etc., etc.). Others wonder whether or not we can prove that companies with high MVC scores actually succeeded in the marketplace (and vice versa). I hope to have that data some day, but it's still too early to start showing such results. Overall, the purpose of the MVC Test--like any research--is not to provide all of the answers, but rather to bring in additional perspective to improve decision-making. It's an unfair advantage in the race to learn and improve the odds of success. But a few weeks ago I shared the MVC Test with a Venture Capitalist who reacted with a quote that left me gobsmacked. I shared an example of how our test helped a startup estimate its Year 1 sales based on actual consumer reaction to its concept. According to this investor:

To be honest, I might have reservations about backing a founder who spent his time and money modeling a forecast like this."

This particular investor worried that founders who took the time to research the market might be too cautious to succeed, and would be better off just getting a Minimum Viable Product into the marketplace. There are a few issues with this reaction. First, it shows an incredibly narrow view of what it takes to be a successful entrepreneur. Many investors claim that the "quality of the founders" is the number one criteria in their investment decision-making, but too many typecast what "quality" looks like. Unfortunately, the use of stereotypes often leaves many high-potential people and ideas on the sidelines. Y-Combinator, for example, doesn't have the most diverse classes, and there is an entire "genome" for what a successful founder team is frequently comprised of. Like in any job interview, investors tend to pick people who look and act like them (but wear hoodies, of course). The second issue is the failure of many investors to adopt a more rigorous, data-based approach. One would think that smart financial minds with millions of dollars on the line would embrace a data-based forecast. Sure, it's a different type of founder coming through the door, but kick them out for bringing a better business mind? Alas, habit change is hard, and some investors are too hard-headed to change. Another investor I spoke with shared a deeper insight in his reaction to the new data that comes out of the MVC Test. I took him through the Year 1 business forecast MVC Test output and he remarked that it was "smaller" than he was used to seeing. With a little prodding, I discovered that he was so used to looking only at broad market size numbers, which typically are in the billions of dollars--and it was an adjustment to dig down to a new business's specific business opportunity, and projections of first year users and revenue. I took this particular investor through the results of a startup in the travel booking business. He said that before the MVC Test, he would only see that travel booking is a $X billion market. From there, he would usually make some generalized evaluation of whether this was a big enough number or not. But with the MVC Test, I could show the percentage of people who say they would use the new business, and at what rate they would book travel. The numbers were outstanding (enough for my firm to invest!), but it was something new and different for him to get his arms around. Now, there are times when you can be too obsessed with short-term numbers and projections. In fact, just this morning I advised one of our startups to stop thinking about how to make a profitable small business in the short-term and instead make bigger, bolder experiments with our investment dollars to see how they could create a giant business for the long-term. The point is that every startup and founding team is different, and each deserves better data and personalized coaching to succeed. Remember, founders, that you have more options than ever in launching your new business, and you are interviewing the investor as a long-term partner, too. Don't give into the hype machine and sacrifice a desire to learn and improve just because a handful of investors want you to kowtow to their worn-out models. Investors that abide by old, inflexible rules are bound to provide poor coaching at best, and force you through destructive paths at worst. Take the push-back as a sign that you wouldn't want to work with them anyway. There's nothing more exciting than entering a large, but stagnant marketplace with a fresh perspective.  Like Amazon beating brick-and-mortars or the iPod remaking the music industry, disruptive innovations often come when new players bring improvements that the established leaders are too slow and arrogant to react to in time.  Startup successes such as Google (over Yahoo!), Facebook (over MySpace) and Instagram (over Flickr) prove how investors and entrepreneurs can reap great rewards by betting on new approaches. Ironically, I believe the latest example of disruption is happening to the Venture Capital industry itself--as new players enter the scene and current players are blind to their own bad habits. While poor VC returns take a turn for the worse, we are witnessing a Renaissance of investment innovation, from Super Angels to Accelerators to Seed+ funding rounds (coined by our own Mike Venerable). Better data and new thinking will be the key to turning the investment market back into market-beating territory. To quote one of the more forward-thinking investors I shared the MVC Test early on, "The world needs this"--and that's what gets me up in the morning. You should learn more about the MVC Test here, and follow me on Twitter here. +Bob Gilbreath