Influencers. Kingmakers. Sharks. Power brokers. Visionaries.
There are a lot of ways the startup world describes venture capitalists that portrays a certain power dynamic, real or perceived, that I believe is at the heart of so many of the industry’s problems. The industry treats VCs as if they hold all the cards, and the worst behaviors of investors reflect that.
Frankly, it makes me uncomfortable, because it’s undeserved.
Who’s really chasing who?
Do you think there is more money out there looking for good opportunities, or more fantastic opportunities?
Right. Clearly, truly great ideas and great teams are at a premium–and there’s a ton of money in the world. It’s rare that you really only have one option as a seed investor (follow on rounds are different, because it is expected that insiders are your first option, and their actions can influence others). The idea that there’s only one on the face of the earth that will back you, and if that person is an asshat that you have to accept them is false. If you can get one investor, you can get others. Remember that we’re lucky to be investing in your company, because ideas as good as yours don’t come around too often, and that will change your approach as you try to gather your first check.
A lot of our success is on paper, or just dumb luck.
There was a time not too long ago when VC bios read “Fab investor”, “Quirky investor”, and “Gilt investor”. None of those companies produced great returns to their backers, so as the old saying goes, “Don’t count the money until it’s in the bank.” Today’s Postmates might be tomorrow’s Fab.
On top of that, you’ve got companies like Bebo that were huge exits that were eventually folded or written off by their acquirers. Be careful giving too much credit to an investor who lucked out because a stupid acquirer mistook a flaming pile of dog poo for the greatest thing since sliced bread.
Founders do most of the hard work.
VCs can provide a useful piece of advice at a key moment–or help make a key hire, but the day in and day out grind is done by the work of the founder and the team, and they deserve 99.999999% of the credit. Most of the time, if that VC didn’t back them, someone else would have and they would have been just as successful.
Good investor doesn’t mean good person.
I wish that only high character people were allowed to make boatloads of money, but that’s not the way it works. Some people are complete scumbags, make a fortune, and karma just never catches up with them. It’s not how I would want to reach success, but for some people, it doesn’t bother them. We can debate whether they’re sociopaths, but we definitely shouldn’t assume that every “great investor” is “great” at being human.
No one is perfect.
Kind of the same as the prior one, but backed off a bit. Even if you’re not one of the worst, and you strive to do your best everyday, a VC isn’t perfect. They’re just a regular person and they don’t always get it right. Founders are in that boat, too.
Few of them made sacrifices to get where they are.
There are a lot of things you don’t get to choose–like the gender you were born with, your race, and whether you were born into money or not. All of these increase the chances that someone winds up being an investor. I hope that, in the future, a more diverse population of investors will come from more humble and less privileged beginnings, but the majority of VCs out there were born with advantages. To put us up on a pedestal as if we built up our career from scratch is giving many of us too much credit.
There… If you go into your next pitch meeting and the VC seems cut down a notch, you can thank me after. 😉