“So are there any other tips you can give when pitching VC’s?” The question was posed by Nolan Simons, an LMU student from Professor David Choi’s Business Incubation class.

I was invited along with Kluge’s CEO, Arturo Perez, to listen to five companies from the class pitch their ideas. It was our job to take notes and provide feedback and I was giving Nolan some advice on what investors like to see in a founder. Nolan was getting ready to raise money for his company, Revita Ink and I thought his business had a lot of potential.

“Typically VC’s look to back the jockey and not the horse.” I noted. It was a turn of phrase that is often used by venture investors and I have heard it many times over the 14 years I’ve worked in the business. I explained to Nolan that investors like to see a team and especially founders who have done it before; entrepreneurs who understand the industry and the needs of the customers and who can provide a solution that is so beneficial people are willing to pay for it.

Launching a company is so challenging and the obstacles so numerous that investors will pay a premium to a founder who has been around the block and knows what it takes to build a business from scratch.

On the other end of the enterprise spectrum, the opposite is true. When it comes to Warren Buffet he believes “Good jockeys will do well on good horses, but not on broken-down nags.” Buffet adds, “I’ve said many times that when a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”

There are two important elements that can help explain these opposing views. The businesses that Warren Buffet buys are enormous and directly affected by the macro conditions of the economy, whereas venture investors are typically exploiting niches or new, “green field” opportunities that have not previously existed or been fully explored. Businesses that are on the wane are known as “sunset businesses”. In Buffet’s case they were furniture manufacturing companies based in the U.S. that were getting hammered by the competition overseas. It didn’t matter how brilliant management was, they couldn’t stop the macro trend the entire industry was undergoing.

Secondly, a start-up  is much more nimble than a billion dollar manufacturing enterprise. If a particular strategy, product or service is not generating the desired results, a start-up can quickly pivot until they discover what works. These pivots must be quick and concise because a start-up won’t have long to discover what their customers want before it runs out of money. And this is precisely the expertise investors are looking for when funding disruptive businesses.

Mind you, VC’s are looking for both: talented, capable and experienced founders who are exploiting trends in a rapidly expanding market. Ron Conway, for example, is known for investing in the “mega trends” of the Internet. Here the assumption is that any business is going to enjoy good growth because the whole sector is expanding.

So if you can demonstrate you have experience and are launching a business in an industry that is rapidly expanding or has little  competition, you will be well on your way to raising your next round.