As you may know Highway 12 Ventures is a part of the Village Ventures network of funds and my partners and I are attending the semi-annual Village Ventures Fund Managers meeting this week. It is a couple days where we can meet with other Fund Managers to share best practices, network, etc. Contrary to what my wife believes - it really is not a boondoggle. Well ok, parts of it are, but I have yet to leave one of these meetings without learning something that can help me be better at what I do. The meetings are usually held on the east coast, but this one is in Boulder, CO. Because we are in Boulder, we have spent quite a bit of time with the TechStars folks. Both the current crop of companies and some of the alumni have been participating in our meetings.
We had a very interesting and entertaining session with five founders of TechStars companies. All have received venture funding and are enjoying positive momentum in their business. The session was a great opportunity for us, as VC’s, to get direct customer feedback from Entrepreneurs. What do we do that is counter productive, how can we be of more help, how can we position ourselves to be a better partner to Entrepreneurs. I have noted some of the key bullets from the session below. Much of it may seem pretty obvious, but I guess if VC’s always delivered on these points then they wouldn’t have bothered to mention them.
If you have a minute, take a look at their feedback and then I would like to open the discussion up to you. What do you look for in a VC? What is most important to you and your business? How do we better serve your needs for building a successful company? We always encourage our companies to reach out to their customers to better understand their needs. It is important for us to do it, as well.
For VC’s:
- Most of the VC’s that I know strive to do this, but the point was made that, we need to bring more to the party than money. Entrepreneurs want to work with people who believe in them and who are going to work hard to help make the company successful. There are lots of different ways to add value - try to find them and deliver results. Investors need to think of themselves as part of the team and realize that they work for the company — not the other way around.
- Don’t take meetings with entrepreneurs when you know you are not going to invest. It is pretty frustrating for an entrepreneur spend time with you and then at the end have you say something like “Well that is really interesting and you have done a nice job, but we don’t invest in that space.” These guys are busy trying to build a company. If you know up front that the answer is going to be no, don’t waste their time, or yours. Or, if you know you are not going to invest, but would like to be helpful, let them know that before the meeting. Then it is their call.
- Don’t give the entrepreneur a moving target. VC’s often tell entrepreneurs that the business looks interesting, but they would like to see the company achieve a certain set of milestones before they will invest. This is a legitimate request, but make sure the milestones are real and if the company achieves them, be prepared to put your money where your mouth is. Unfortunately, this request can sometimes be used as a way of avoiding or prolonging the need to just say “no”. Don’t keep changing the rules on the entrepreneur.
- Post investment, try to be consistent in terms of your level of engagement with the company — both in terms of frequency and intensity. It can be difficult for the entrepreneur to respond to, or anticipate your needs, if one week you are a raving maniac wanting to review every level of operational detail and then you turn around and go completely dark for 8 weeks. Be consistent, transparent and predictable.
- Every founder and every company is different. You can’t just apply rules of thumb, or boiler plate solutions to companies you are working with. Each has a different culture and its founders and employees may be motivated in different ways. It is critical to bring your experience to the table, but always try to apply it in a way that fits that company and situation.
- Don’t under estimate that value of blogging and Twitter. Entrepreneurs use these to get a sense of who you are, and what perspective you may bring to their business. Helps them to understand if you are someone that they might want on their board, or not.
I want to thank the founders that shared this feedback with us: Natty Zola, Everlater; Alex White, Next Big Sound; Isaac Saldana, SendGrid; Ari Newman, FilterBox/Jive; and Tim Wolters, RoundPegg.
Like all of our portfolio companies, we want to continuously get better at what we do. If you have something to add, we would love to hear it.
Thanks.