The venture capital vernacular has been around for decades. Round sizes morph (“old” versus “new” Series A) and new classes emerge (“super angels” and “micro-vcs”) but I continue to hear some investors talk like this:
- “We’re so excited to welcome [Startup] into our portfolio.”
- “[Startup] has been a great deal for us.”
- “We really made a big bet by investing in [Startup].”
- “I’m so proud of our great company [Startup].”
I know these VCs mean no harm, but statements like this come off as pompous and arrogant. Founders, teams and startups are not “investments in a portfolio” or “deals to be done.” Last I checked, unless one owns 50.1% of a company, it’s not technically “theirs.” And don’t get me started on the “I’m so proud of” tweets…
While vcs get to invest in numerous companies at a time to mitigate their risk, founding teams go all in with their personal and financial capital. Founders are the ones that have the guts to quit their jobs and start something from nothing. Startups have to build teams and products, sell their vision to customers, and manage cash wisely before running out of oxygen and heading back down the mountain.
The best investors care deeply about their founders and teams, and help them in every way they can to build a company that will change the world. There’s plenty more characteristics than the 10 below, but you’ve selected investors well if they:
- Continually ask, “How can we help?”
- Make meaningful double opt-in introductions (more on this here and here)
- Are always on-time and prepared for calls and meetings
- Ask the hard questions and help confront issues — no sugar-coat rule
- Don’t send random articles about new competitors every week
- Always tweet and forward meaningful news about the team and startup
- Helps team steer away from common pitfalls
- Keep their mouth shut about your confidential information
- Help bring new investors to the table when fundraising
- Do what they say they are going to do
Angels and VCs should worry less about the return aspects of backing a team and more about how one can open up his or her network in every way, shape and form to benefit the startup. Ultimately, investor returns have a way of showing up the more an investor is an asset to the startup. Amazing how that works.
Recipients of this post are not to construe it as investment, legal, or tax advice, and it is not intended to provide the basis for any evaluation of an investment in any fund. Prospective investors should consult with their own legal, investment, tax, accounting, and other advisors to determine the potential benefits, burdens, and risks associated with making an investment in any fund.
