…just the ones who deserve it. VC bashing, like bubble-talk, is clearly in vogue. A good friend and co-investor of mine, Jerry Neumann, tweeted the following today:
Some entrepreneurs are so paranoid about VCs that I think it would be easier to communicate with them if I actually were an arsehole.
I’ve gotta say, I completely understand where Jerry is coming from. Quite simply, there is a lot of mis-information and mind games going on among members of the entrepreneurial set that goes something like this: “VCs are arseholes. Take their money if you must but by all means keep them at arm’s length. They will try and f*&k you at every turn. And certainly don’t trust them.” In all candor, this is about the most idiotic and ill-informed advice an entrepreneur could give another. I can tell you for a fact this is true not just anecdotally but because I’ve recently experienced these precise fears and misgivings with one of my portfolio companies.
The IA Ventures way, as is the way of all the VCs I choose to work with, is to be partners with management, hands-on and in the trenches, and to be trusted advisors and counselors to management. This is almost always extremely well-received by our founders, who specifically seek out our involvement both because of our domain expertise but also our modus operandi. But sometimes we run across situations where founders whom we love running businesses we think we can help appear wary of our close involvement. There is an invisible barrier separating the founders and the investors, and while interactions are pleasant they are generally superficial and perfunctory. Requests for ways in which we can be helpful aren’t actively responded to. We are seldom asked our opinion about strategic matters. From our perspective it is very frustrating because we want to help and are equipped to add value, but for some inexplicable reason the founders simply won’t let us.
Well, the reason in a recent case is actually quite explainable. In a cathartic “clearing the air” session, it came out that these first-time founders had gotten input from more experienced entrepreneurs indicating that they shouldn’t trust VCs. Not IA Ventures and our co-investors but VCs in general. They can’t add value. They will screw you. All the usual general, worthless crap. So after a year of being in a deal, trying to break through the protective shell of the founders and repeatedly being denied, the truth came out. And I’ve got to tell you, I am royally pissed off.
My anger is less at the founders – they are young, inexperienced, and actively solicited input from those more experienced than them, which is exactly what I would have told them to do – than at the seasoned founders who because of their own tainted experiences with specific people and firms are painting the entire industry in a negative light. While the founders are great and did a really good job over the past year almost completely on their own, it is criminal that they could have received the help of trustworthy, motivated and knowledgable investors but felt afraid to let it happen. And I lay the blame firmly at the feet of the haters.
I totally get being angry at people because of bad behaviour, and sharing concerns about working with specific parties based on actual experience. But to have a holy war against a set of people just because they are members of that set is the worst kind of profiling there is. And there are very real and tangible costs to such behaviours, which impact actual people’s lives. So before advising less experienced founders who look up to you not to trust others simply because they work in a given industry, think long and hard about the logic and the impact of those words. Because I think you’ll find that they are neither fair nor helpful to anyone, especially those you are supposed to be helping: the founders.
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