September 28, 2014 at 20:03The Truth About Venture Investors, Part 2
- Transfer
Part 1
When looking for an investment company, remember - they vary greatly in style and quality. For example, some companies are very fond of entrepreneurs. Others relate to them harshly. Interestingly, financial success in the field of investment has nothing to do with attitude to entrepreneurs. Individual investors within companies also vary greatly in style, personality, knowledge, experience, ability to help, energy and ethics. I would recommend choosing the right partner within the firm, rather than the right firm.
This is contrary to intuition, and the quality of the company, of course, is important. But a partner is a person with whom you will work. You will see other members of the company a couple of times in your life. It is better, of course, to choose a good company and a good partner in it, but even in the best companies there are weak partners.
They say that earlier professional VIs were more similar in level - the founders and pioneers in business, and then those whom they chose as a protege who grew up in venture investors under close attention and through rigorous training. The explosion that occurred in the late 90s led to a wide variety of people who became partners in venture capital investment companies. Many partners do not have much experience in VI, but were an ID in large companies, or entrepreneurs with their own startups, or worked as lawyers or recruiters, or came straight from business schools without any experience.
In the work in each of these VIs there are pros and cons. For example, a VI with experience in managing a company is perfect for talking about how to conduct a business. But they usually see worse prospects (because they worked with one or two companies, and a professional VI could cooperate with 30 or more companies), and are reluctant to let go of the helm. A former recruiter VI can help a lot in hiring staff - one of the important areas where a VI can help. A former lawyer can help you with your parking ticket problem. But you can not find a replacement for the VI, which has been doing this for 20 years and saw with its own eyes more strange situations with startups than you can imagine.
The ideal investment for VI is one that will succeed without his help.
If your startup does not fall into the category of “ideal investment”, what can you count on?
Firstly, it is necessary to learn that its founders must make a startup successful. It may happen that no matter what the VI does, it will not be able to tip the scales in your favor. In addition, VIs are usually extremely busy. When you sit on the top ten boards of directors, look for sources of financing for new projects, track the fast-changing technology industry, make presentations with your investors - it's hard to find free time. Although, sometimes you can stumble upon a lazy VI ... But I will tell about this when I am a little more drunk.
It is best to assume that the main role of VI in your business will only be an infusion of money. Then the other surprises will be pleasant. What else can help VI: hiring, strategy, presenting to partners, presenting to clients, additional financing, valuable advice and great life experience. Some companies arrange useful programs such as forums where start-ups-novices can communicate, for example, with large advertising companies. The only way to know exactly how this VI will help you is to ask other companies that it finances. And do not expect help to come suddenly - ask yourself. You do not need a VI that tries to help too much without asking you.
My friends at VI spend a surprisingly large part of their time working with failed startups. The reason for this is the definition of “ideal investment”. Winners manage without their help. Top investors spend most of their time with successful startups, helping them achieve maximum success. But usually, life in the investment trenches consists of trying to start from the pusher or otherwise fix the problems of bent startups that are initially failing. Can you imagine how unhappy it is?
Here's a surprise to you regarding VI: their main task is often to help expand charitable organizations that are trying to make the world a better place. The largest investors in many first-class firms do not seek profit - universities, large charitable foundations. Partly due to the fact that such firms are very patient and can wait a long time. But also because many of the richest VIs feel an internal need to help such organizations. It is difficult to notice, because investment firms do not disclose details about the activities of their partners. But recently, after several discoveries of such details, it has become possible to consider closer the work of the largest investment firms in the world. For example, by looking at Sequoia’s details regarding Google’s purchase of Youtube, you can learn
This is not unusual. The best VIs manage to make the world a better place in two ways: by helping new companies to take shape and bring new technologies and medicines to the world, and by helping universities and foundations in their mission to educate and improve people's lives.
Why do we need to be thankful that we live in a world where there are VIs, even if they scream at us at meetings, if they even fund us.
Imagine a world without professional VIs. It is understood that far fewer new companies with greater potential will receive funding, fewer new technologies will see the light, and fewer drugs will be invented. We should not only be grateful, we should hope that VI will live and prosper for dozens and hundreds of years, because the companies they finance can do many good things. And funding charitable foundations also does a lot of good for the world.
Remember that VI in its present form has existed for only about 40 years. And during this time, technology has blossomed in a surprisingly violent color compared to any other time. This is not a coincidence.
We select investment companies and investors within companies
When looking for an investment company, remember - they vary greatly in style and quality. For example, some companies are very fond of entrepreneurs. Others relate to them harshly. Interestingly, financial success in the field of investment has nothing to do with attitude to entrepreneurs. Individual investors within companies also vary greatly in style, personality, knowledge, experience, ability to help, energy and ethics. I would recommend choosing the right partner within the firm, rather than the right firm.
This is contrary to intuition, and the quality of the company, of course, is important. But a partner is a person with whom you will work. You will see other members of the company a couple of times in your life. It is better, of course, to choose a good company and a good partner in it, but even in the best companies there are weak partners.
They say that earlier professional VIs were more similar in level - the founders and pioneers in business, and then those whom they chose as a protege who grew up in venture investors under close attention and through rigorous training. The explosion that occurred in the late 90s led to a wide variety of people who became partners in venture capital investment companies. Many partners do not have much experience in VI, but were an ID in large companies, or entrepreneurs with their own startups, or worked as lawyers or recruiters, or came straight from business schools without any experience.
In the work in each of these VIs there are pros and cons. For example, a VI with experience in managing a company is perfect for talking about how to conduct a business. But they usually see worse prospects (because they worked with one or two companies, and a professional VI could cooperate with 30 or more companies), and are reluctant to let go of the helm. A former recruiter VI can help a lot in hiring staff - one of the important areas where a VI can help. A former lawyer can help you with your parking ticket problem. But you can not find a replacement for the VI, which has been doing this for 20 years and saw with its own eyes more strange situations with startups than you can imagine.
Ideal investment for VI
The ideal investment for VI is one that will succeed without his help.
What help can be expected from VI
If your startup does not fall into the category of “ideal investment”, what can you count on?
Firstly, it is necessary to learn that its founders must make a startup successful. It may happen that no matter what the VI does, it will not be able to tip the scales in your favor. In addition, VIs are usually extremely busy. When you sit on the top ten boards of directors, look for sources of financing for new projects, track the fast-changing technology industry, make presentations with your investors - it's hard to find free time. Although, sometimes you can stumble upon a lazy VI ... But I will tell about this when I am a little more drunk.
It is best to assume that the main role of VI in your business will only be an infusion of money. Then the other surprises will be pleasant. What else can help VI: hiring, strategy, presenting to partners, presenting to clients, additional financing, valuable advice and great life experience. Some companies arrange useful programs such as forums where start-ups-novices can communicate, for example, with large advertising companies. The only way to know exactly how this VI will help you is to ask other companies that it finances. And do not expect help to come suddenly - ask yourself. You do not need a VI that tries to help too much without asking you.
How VIs spend their time and why you need to feel sorry for them
My friends at VI spend a surprisingly large part of their time working with failed startups. The reason for this is the definition of “ideal investment”. Winners manage without their help. Top investors spend most of their time with successful startups, helping them achieve maximum success. But usually, life in the investment trenches consists of trying to start from the pusher or otherwise fix the problems of bent startups that are initially failing. Can you imagine how unhappy it is?
VI - the soulless sharks of capitalism, or surprisingly generous philanthropists? Or both?
Here's a surprise to you regarding VI: their main task is often to help expand charitable organizations that are trying to make the world a better place. The largest investors in many first-class firms do not seek profit - universities, large charitable foundations. Partly due to the fact that such firms are very patient and can wait a long time. But also because many of the richest VIs feel an internal need to help such organizations. It is difficult to notice, because investment firms do not disclose details about the activities of their partners. But recently, after several discoveries of such details, it has become possible to consider closer the work of the largest investment firms in the world. For example, by looking at Sequoia’s details regarding Google’s purchase of Youtube, you can learn
This is not unusual. The best VIs manage to make the world a better place in two ways: by helping new companies to take shape and bring new technologies and medicines to the world, and by helping universities and foundations in their mission to educate and improve people's lives.
Why do we need to be thankful that we live in a world where there are VIs, even if they scream at us at meetings, if they even fund us.
Imagine a world without professional VIs. It is understood that far fewer new companies with greater potential will receive funding, fewer new technologies will see the light, and fewer drugs will be invented. We should not only be grateful, we should hope that VI will live and prosper for dozens and hundreds of years, because the companies they finance can do many good things. And funding charitable foundations also does a lot of good for the world.
Remember that VI in its present form has existed for only about 40 years. And during this time, technology has blossomed in a surprisingly violent color compared to any other time. This is not a coincidence.