Paul Jazefak has an interesting post on VC bashing. I was at the TiECon last week chairing a panel around fundraising, when the ultimate happened – a VC on the panel started bashing VCs! How much worse can it get 🙂
I think part of the issue here is a lack of understanding of the VC business – VCs are not angels (as much as angels arent – no pun!) They are in a business. However, in my view, there is a “value system” to each business and each individual. For VCs, my list would include integrity, empathy, access, humility, partnership and fairness. Not just because its good human nature to have these (which is true of many other things I didnt put up here, such as transparency,) but because these are values that IMHO help build a great VC business.
For folks out there who have pitched or tried to pitch to VCs, what have been the biggest frustrations and delights? For people who actually have VCs invested in their companies, what do you appreciate about them and what is it that you’d like them to change?
Update: Someone commented on this article on facebook, saying VCs suck because most of them have no operational experience. Does that really matter? Check out this analysis by pehub – doesnt seem to say so. But then, nice rebuttal here.
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>For VCs, my list would include integrity, empathy, access, humility, partnership and fairness.
Well said. This is actually a very good list that I wish more venture partners would internalize.
-Bob
I think VC don’t know what is their primary motive.
Guy Kawasaki says that the primary role of VC is not to make money, but challenge big companies, and keep them on toes.
But if you Indian VC, they say they are here to make money…how foolish.
Neither VC nor entrepreneur are here to make money in startup ecosystem, rather to bring change.Money is the by-product for both of them.
But unfortunately Indian VC don’t understand this.
They are ready to finance 11th me-too company , but they are not ready to fund 1st company.
They need to get more matured that the entrepreneurs today.
I’d agree. It’s most likely an issue of not understanding the nature of the “business”.
Things I’ve Always Appreciated about VC’s
1. Experience, Advice – give outsider’s opinion, not biased
2. Network – Ability and willingness to open doors
3. Strategy – If experienced in space, roll up sleeves and strategize.
4. Support – pretty much close to unconditional.
Things I’ve Been Frustrated While Pitching
1. Respect for Time – especially Indian VC’s – don’t seem to value the entrepreneur’s time. Cancel at last minute, reschedule, waits, etc.
2. Lack of Follow-up – I’ve done this enough to know a reaction without hearing the words the following week. But, i’ve seen dozens of companies suffer in India because the VC just goes cold, and doesn’t find it worthy of their time to follow up when they say they would. How difficult is it to say “not for us at this time guys” :).
I’m delighted by VC’s in the pitch cycle who provide constructive feedback even though they’re not interested in the deal. I simply love that.
Disclaimer: all the flame coming from someone who has not taken VC money for his own company. big grain of salt there.
Have been in over 100 VC pitches in my Silicon Valley career and over 30 VC pitches in India now. Also have a unique distinction of refusing an Indian VC job when moving back to become an Indian entrepreneur. Have the following observations to make about Indian VC’s, as a contrast to their American counter-parts (generally speaking):
– Good VC’s may be good entrepreneurs or good investors. If they are both, great things happen. Indian VC’s are neither. You can count on the fingers of one hand the number of Indians VC’s who have operational or start-up experience (and it shows) [you being one of the exceptions Alok]. As far as being a good investor goes, the VC’s seem to behave like employees rather than partners, following somebody else’s rules or gut.
– The Indian VC scene is smitten with young MBA’s whose loans precluded them from taking up entrepreneurship risk in India, but their personal belief seems to be that being a VC is equivalent to the entrepreneurial challenge (in both risk and contribution). On the one hand, the VC’s want to be risk averse money lenders, and on the other hand the same guy believes that he can and should drive the company direction. The combination is fatal.
– Indian VC’s hardly say “I don’t know” as much as entrepreneurs do. An intellectually honest VC would agree that the business of VC in India is risky and unproven, and there are solid reasons why the VC business in India would fail. Yet how many VC’s do you encounter admitting this as openly and honestly as entrepreneurs who are expected to admit the same risk about their own companies. The business of entrepreneurship is fraught with risk already. How is it fair that VC’s should further load their own (start-up) risk on entrepreneurs. Unfortunately, those term sheets (IRR, tranches, 2+ board seats, spreadsheet forecasts, veto on non-equity decisions) are a kiss of death.