Slack CEO: Picking the right investor is as important as picking the right college

Slack CEO Stewart ButterfieldSlackSlack CEO Stewart Butterfield

In the same way that saying you went to Stanford holds a certain caché in Silicon Valley, having the right venture capital firm invest in your startup is important, too. 

Entrepreneurs will sometimes accept 25% lower valuations if it means being associated with the right firm, according to Tad Friend, who profiled Marc Andreessen for the New Yorker

Stewart Butterfield, cofounder and CEO of the billion-dollar business messaging startup Slack, told Friend that he thinks signing on a name-brand firm — like Andreessen Horowitz — is crucial for companies. 

“It’s hard to overestimate how much the perception of the quality of the V.C. firm you’re with matters — the signal it sends to other V.C.s, to potential employees, to customers, to the tech press,” Butterfield said. “It’s like where you went to college.”

Butterfield definitely believes in the magic of perception: He told Fortune earlier this year that Slack gunned for a higher valuation since “one billion is better than $US800 million because it’s the psychological threshold for potential customers, employees, and the press.”

Last month, Slack raised $US160 million at a hefty $US2.8 billion valuation.

The cofounder and CEO of payments app Stripe echoed Stewart’s thoughts.

Two big names — Andreessen Horowitz and Sequoia Capital — participated in Stripe’s seed round of funding, which “was a signal that was not lost on the banks we wanted to work with” when the startup was ready for its Series A, Patrick Collison says.

Stripe ended up landing a $US100 million valuation even though it hadn’t launched yet. 

Read the rest of The New Yorker profile here. 

 

Disclosure: Marc Andreessen is an investor in Business Insider.

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