Best analysis of three different types of VCs that founders can add to a cap table: 1. Dumb and they know it. They do not interfere & appreciate their limited knowledge. 2. Brilliant & helpful. Get involved, add value. 3. Dumb & think they are smart. Most dangerous. #Founder #funding #business #investing #vc #venturecapital #entrepreneur #startup
To complete 2x2 matrix: Brilliant and not involved, because time is better spent chasing the next deal. Same outcome for the founder as Dumb/passive + disappointment
70-20-10 rule. 70% are 3. Dumb & think they are smart: Hurt a business 20% are 1. Dumb and they know it: Don't hurt or help 10% are 2. Brilliant & helpful: Help the business The best thing VCs can do is try to be realistic about what they can truly contribute, that at least you won't fall into the 70% which hurt the businesses they're supposed to help.
I think you're missing a messy 4th option. Brilliant & Helpful, sometimes. This will usually align to their specific domain expertise. Dumb and Think Smart, sometimes. This will usually align with something the VC had adjacent success with but wasn't instrumental in creating, i.e., they were a chief engineer at a unicorn and think they know sales. This is really really hard for founders.
Someone needs to create a site like glassdoor for VCs where founders can rate them as 1’s, 2’s or 3’s.
Haha, love the blunt breakdown Harry Stebbings! While angels might not have the same VC structure, there's a fascinating investor zoo out there too. 1. Backseat Driver: Offers unsolicited advice and tries to control decision-making. 2. Matchmaker: Seasoned entrepreneur who connects you with their network and offers valuable insights. 3. Silent Supporter: Believes in your vision and provides capital without micromanaging.
I would say there is a smart-dumb spectrum. Some are smart in some areas and dumb in others. Also there is a level of awareness. Fits nicely into a 2x2 matrix like the competition ones in every pitch deck. I would assume most would put themselves in the upper right.
Sometimes the best value added to a startup isn't just the cash but the self-awareness of the investor.
3. Pain in the ass that hunt you in your dreams...
4. Dumb and helpful. Add value by connecting you with others I guess that could be one?
purple gradients
8mois this a confession