Photo Credit: BlueSkyImage / Creative Commons
By Christoph Janz @ Point Nine Capital
We're fully aware that we don't always live up to the ideal of the “good VC”, but as Stefan Smalla once said, “Nobody is exactly like that, but it's good to move towards that ambition. Inch by inch.”
Inspired by Ben Horowitz' excellent “Good product managers, bad product managers” post and Stefan Smalla's “Good leader, bad leader” masterpiece, I've tried to put together my thoughts on what I think makes a great venture capital investor. Thanks go to my colleagues at Point Nine Capital for their invaluable feedback, in particular Michael, Mathias and Rodrigo, who reviewed an early draft of this post and provided lots of great comments.
This post represents our current thinking, which may evolve over time, and some parts are still a work in progress. Feedback and discussion with other VCs and entrepreneurs is very welcome.
A good VC does everything she possibly can to support her portfolio companies
A good VC is truly a value-add.
A good VC is available for her portfolio companies almost 24/7. If a portfolio founder needs her, she will do everything she can – roll up her sleeves, use her social capital, get on a plane – to help. A good VC is sometimes a recruiter, sometimes a beta tester, sometimes a personal mentor, and isn't afraid of getting her hands dirty. Not scalable? Screw scalability. If a portfolio founder needs your help in putting out fires, the last thing he or she cares about is how this scales from a VC business model perspective.
A good VC doesn't only react to requests from the founders. A good VC knows the current challenges of her portfolio companies and is proactively looking for solutions all the time.
Good VCs create firms where portfolio founders have equal access to all partners and not just to “their” partner.
Knowing that there are limits to the help she can provide to founders herself, a good VC tries to leverage the knowledge and expertise of other people. In particular, she facilitates knowledge exchange between the founders of her portfolio through various forums, online and offline.
A bad VC overpromises in the deal-making phase and under-delivers once the deal is done.
“We view ourselves as a services firm. We try to earn our reputation and brand every day. We practice the art of adding value and we want to be the highest executing board member that founder has and we're out there everyday trying to earn that reputation.”
Bill Gurley
General Partner, Benchmark Capital
A good VC is humble and doesn't try to run the show
A good VC is aware that there is a huge information gap between founders and VCs with respect to the founder's business. He understands that the founder has thousands of hours of experience in his industry and with his customers and intimately knows the people on his team, whereas the VC's knowledge of the startup is often much more superficial. He understands that many if not most of the ideas he will come up with are things that the founder has already considered and knows that while he can provide great input, advice and a different perspective, he should neither try to micro-manage nor try to make decisions for the founders.
