We sat down with Mark Peter Davis, Managing Partner at Interplay Ventures, to discuss investing best practices, recommended startup due diligence, and some hidden startup investing nuances.

Should you invest in a startup with a huge market, an incredible team, or phenomenal technology?

• The key is to invest in a company that has some degree of each.
• We’re trying to check all of the boxes at the sufficient level.
• You should never sacrifice two of the three for just one strong area.

What do investors look for when searching for successful startups?

• Pinpoint the company’s core function.
• Analyze whether or not the core team can efficiently execute the core function.
• Organized and emotionally intelligent entrepreneurs.

“Wait for the one where you can’t believe you’re going to get in…that’s when you should invest”

Favorite startup investing advice?

• Don’t be too quick to rush into a deal.
• Don’t be afraid to pass on a company that isn’t fully there.
• There are always similar companies to examine.

Any hidden nuances to startup investing?

• If a company is targeting a narrow customer base, things can go wrong quickly.
• Always look for momentum in product development.
• Look out for possible friction between startup founders.

Mark Peter Davis is a venture capitalist, serial entrepreneur, author and community organizer.  MPD is the Founder of Interplay Ventures an investment and incubation firm based in NYC.  He is also the author of  The Fundraising Rules, a handbook designed to help entrepreneurs raise capital, and the founder of both the Columbia Venture Community and the  New York Venture Community. You can follow his blog at mpd.me and his tweets at @mpd.

Startup Investing 101 is a web series dedicated to educating investors about the world of startup investing.