On being a bipolar VC…
So, it’s been almost a year since I moved to the dark side. People still often ask me how I like it. The short answer: I love it! Can’t believe I get paid to do this. But it struck me yesterday that I need to be bipolar in this role. And I am sure most VCs, especially those that work at the early stages, feel the same way.
Early stage, seed VCs focused on web are ever-present on the web themselves. From their blogs to Twitter, Quora, Namesake, etc, etc, etc. They’re out there. Sure, they’re building their brand and hopefully generating dealflow for their funds. But they are genuinely and deeply giving of their time and expertise to entrepreneurs of all kinds.
Offline, many of us are active supporters and builders of our local communities. Attending, promoting and sponsoring events. Bringing in startup celebrities to give them a taste of what we have going on locally. Trying to shine a spotlight on our communities.
Now compare that with what we have to do the rest (and bulk) of our time which is to say ‘no’. When we look at potential investment opportunities we need to do so with a healthy dose of skepticism. Entrepreneurs have more than enough optimism. Our job is to challenge that and really dig into the founders’ thinking, potential, vision and ultimately deem who is worthy of our investment $.
So far, I have invested in just under 7% of the deals I have been introduced to. When you factor in cold submissions from people that I don’t know the number is closer to 1%. So, this means that the vast majority of entrepreneurs walk away unsatisfied. These are the same people we are trying to support when we’re not making investment decisions.
There’s no getting around this reality. And as I have learned now that I am on the other side: the decision to invest has a lot of subjective and personal elements. The timing has to be right. I have to “love” the team and space. It has be something I can personally add value to. And all the partners in our team have to be solidly behind it. In many cases, when we pass on an opportunity, it does not mean we think the business is bad. It just means it’s not right for us.
As I said, there’s no changing this reality. Many VCs try to add as much value as possible even for the opportunities they reject. I will try and do that through the questions I ask but I’m not going to waste someone’s time giving some prescription as part of a decision to pass on their company. Not sure how receptive those people are to my pearls of wisdom. And I’d rather focus my time on our portfolio. So, I guess, I’ll have to resign myself to continue being bipolar…