VC investors like founders who run customer research — here's why

Stephanie Knapp
February 25, 2022
VC investors like founders who run customer research — here's why

Securing venture capital funding can change the trajectory of a startup. On top of the financial resources, mentorship is invaluable to navigating a product's early stages. So how can companies trying to raise funds stand out to investors? Customer research is one method. 

John Zeratsky is a co-founder and general partner at Character, a seed fund supporting founders with capital and sprints. During a recent discussion, we had the opportunity to ask John what impact research has on his investment decisions. 

This is what we learned. 

1. Prototyping and research lead to more insightful change

There’s a gap between your initial idea and a product that’s ready for market. Rather than make big, uninformed decisions, John prefers when founders use research to make ongoing changes. John noted that he sometimes sees founders that conduct some customer research but abandon it once it’s time to create the product.

“There's a default mode of stopping customer discovery and trying to leap over the chasm into MVP land.”

John thinks there’s a better way, though. 

“You don't have to leap over the chasm; you can start to build a bridge through prototyping. Take the same conversations you’re already having but give customers something to react to.”

By keeping customer discovery a part of your development process and integrating prototypes, you can make adjustments as you go. This way, you won’t make it across the chasm and realize you’ve gone the wrong way. 

2. Founders who are methodical in exploring opportunities stand out to John and his team

Character stands out as a seed fund because the team works hand-in-hand with companies to complete sprints to find and expand product-market fit. Since Character co-founders John Zeratsky and Jake Knapp wrote a New York Times bestselling book on sprints along with Braden Kowitz, they prefer working with companies who are familiar or interested in the sprint method. 

John noted that companies who seek investment from Character tend to see the value of research already. 

“The key part of the design sprint is Research. The last day of every design sprint is running a test with customers. If you're thinking of raising money from us because you want to run design sprints with us, and if research is part of every design sprint, then you probably care about research.”

Aside from prior knowledge or experience with design sprints, John looks for teams that take an organized approach to learning. 

“Even if a founder doesn't care about sprints, per se, we think it's really important to work with and invest in founders who are very methodical and relentless in how they explore opportunities, and then they validate solutions. “

3. Research keeps your decisions customer-centric

Research helps founders iterate products and validate solutions on top of keeping them close to customers. Maintaining contact with customers becomes even more critical if there are natural differences between the work founders do in their companies and what customers do. 

“The bigger the gap between you as a team and the customers you're serving just in terms of the work that you do, the types of professional and personal background you have, the more valuable it is to do research, and the bigger the impact you see.”

If founders want to bring their vision to life, they can’t spend time with their heads buried in the sand. 

4. Experience with research gives perspective

John's also looks for investment candidates with prior experience with research. He noted that that often manifests in repeat founders.

“Repeat founders are more likely to lean on research because if you have experienced it, you have a better understanding of what you know and what you don't know.”

First-time founders can still get a leg up in this category, though. Start creating a culture of research now so that it becomes a natural part of your work process. 

Great Question can help make customer research a habit now

Whether you’re seeking investment funding or not—customer research helps companies make informed decisions. Great Question helps companies like Canva and Blinkist put research on autopilot through panel management, incentives, research repositories, and more.

Create a free account to get started, or request a demo to learn more.

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