Introducing Not Boring Capital: Building a Fund with a Story to Tell

Introducing Not Boring Capital: Building a Fund with a Story to Tell

Not Boring Capital is not your average venture fund. With $8 million in investments, this fund focuses on companies that have compelling stories to tell and helps them amplify those stories. Led by Packy McCormick, a venture capitalist and writer, Not Boring Capital invests primarily in Seed through Series B companies, with occasional pre-seed and growth-stage investments.

One of the unique aspects of Not Boring Capital is the symbiotic relationship between investing and writing. Packy believes that his skills as a writer make him a better investor, and vice versa. This flywheel effect allows him to not only identify promising companies but also effectively communicate their stories to the world.

While Not Boring Capital invests in various industries, fintech is its leading vertical. With six investments totaling $525k, Packy recognizes the potential in investing in technology that is transforming the financial industry. However, Not Boring Capital also explores other sectors, making smaller investments to secure a seat in the next round or increase deal flow. These high-risk, high-reward investments make up about 5-10% of the fund's total investments. Additionally, Not Boring Capital allocates about 20% of its investments to later-stage or safer opportunities that have a lower ceiling but a higher floor.

The growth of companies like Apple, which is currently valued at $2.4 trillion compared to Exxon's $400 billion market cap in 2011, shows the potential for exponential returns in the venture capital world. Not Boring Capital aims to identify companies that have the potential to significantly increase in value, ultimately returning the fund's investments.

But what makes a company stand out and attract investors like Not Boring Capital? According to Packy, it all comes down to how the product makes people feel. Startups often focus too much on the functionality and features of their products, neglecting the emotional connection they should be creating with users. Users want to feel entertained, connected, and like they belong somewhere. It's important for founders to understand the emotional value their product provides and engineer for it.

To create a habit-forming product that keeps users coming back, founders should consider several factors. Firstly, they should focus on the emotional experience and how the product makes users feel. This can be achieved through playful exploration, moments of pleasant surprise, and creating a sense of control and flow. By understanding their users' goals, emotions, and providing them with a sense of reward, founders can motivate users to engage with their product regularly.

Another crucial aspect is the frequency and timing of product usage. Founders should design their products with the limited attention and time of users in mind. By making the key behavior or habit as easy as possible to perform, users are more likely to engage with the product. Additionally, founders should strive to create a story behind the design, underpromising in the story and overdelivering in the user experience.

Understanding human psychology and the motivations behind user behavior is essential for founders. By identifying pain points, providing solutions, and offering users a sense of progression, founders can create a product that resonates with their target audience. Building habits within users' minds and becoming the first choice when they think of a particular need or behavior is a powerful competitive advantage.

Engagement cannot be bought; it must be designed into the product. Founders need to provide lasting value and ensure that user behavior occurs with sufficient frequency for a habit to form. By using models like the Hook Model and Lewin's equation, founders can diagnose deficiencies in their product and optimize for habit formation.

Furthermore, founders should strive to make their products simple, satisfying, and the easiest option for users to achieve their desired actions. The law of least effort guides human behavior, and people generally choose the path of least resistance. By simplifying interactions and creating a sense of community, founders can cultivate a strong user base.

In conclusion, Not Boring Capital's unique approach to investing in companies with compelling stories sets it apart from traditional venture funds. By incorporating the principles of habit formation, emotional connection, and understanding human psychology, founders can build products that keep users coming back. To create a successful product, founders should focus on the emotional experience, provide lasting value, and design for habit formation. By doing so, they can attract investors like Not Boring Capital and build a loyal user base.