Chanced upon this great post by Matt Blumberg on “10 Characteristics of Great Investors“.
Should be read by ALL investors, I think.
I am listing my favourite five of the ten characteristics below:
- Great investors know how to give strategic advice without being in the operating weeds of a company
- Great investors get to know whole management teams, not just CEOs
- Great investors invite you to do diligence on them by giving you a list of every CEO they’ve ever worked with and asking you to pick the ones you want to talk to
- Great investors ask great questions
- Great investors don’t publicly take credit for the success of their investments, even if they were major drivers of that success
I was here…talking to a bunch of bright people and listening to some great ideas…
Could anything have been more exciting?!
I scored as low as it could possibly get*…which set me thinking – is this the right test for becoming a VC? (I can hear Tut tuts!)
Actually, Is there any right “test” for determining whether a person is well-suited for a career in VC – or more importantly, will he/she succeed?
The test misses one important thing; unfortunately it cannot be measured…and unlike the experiences and skills one has, it is entirely unpredictable and may desert you when you need it most – I am thinking *LUCK* 🙂
* Yes, I know this is post-facto rationalisation, but…
I think I screwed up “Background” in a major way…missing on all the +5s and being saddled with two -5s (for my sins at LBS and Monitor) 🙁
Note to Guy: Can I get a bonus +5 for “unusual” background? Radio DJ, Comp Engg, Mushroom farmer, Diplomat etc? 🙂
I was going to check out The Funded* today but discovered that Jason has beaten me to it!
The site does not have many European funds but does briefly mention London Seed Capital, Atlas and Index – sadly nothing on Amadeus.
I have nothing to add to what Jason has written except to re-emphasise the following (this is for entrepreneurs and start-ups):
If you’ve dealt with (and preferably received funds from) a VC, I would recommend you post your experience on The Funded.
As for me, I will try and see if we can get a nice entry for Amadeus 🙂
P.S. Thanks to Barak for a great title and to Loken for the link (in response to my earlier post)
Ok…I admit that is an exaggeration…but one of the VC industry’s well-known article of faith is that good VCs must have some entrepreneurial experience in their past lives/careers… (
see e.g. one of Guy Kawasaki’s best posts: “ The Venture Capital Aptitude Test “. Update: pl. see comment below.
The main premise being of course that unless you have been an entrepreneur, you can never understand what it is to be on the other side of the table, you find it hard to empathise with management and you cannot really add value.
Is this really true? While empirical evidence may suggest a strong correlation, it would be wrong to infer a causal relationship based on that.
Why do I say that? Look at John Doerr, arguably one of the most successful VCs in silicon valley (or anywhere else for that matter)…and look at Mike Moritz (a former journalist with TIME magazine)…On the other hand, I know there is Vinod Khosla…
But that’s really not my point…
Fundamentally, VCs and entrepreneurs are on the opposite sides of the spectrum…while VCs need to act from the “buy” side: cautious/ paranoid/ careful…entrepreneurs would usually be on the sell side: exuberant, wildly optimistic, believing that anything is possible, in a hurry…
So to a certain extent, whether you will be a good VC or a good entrepreneur is “hard-wired”…and it is difficult to be both…
No wonder then that great entrepreneurs rarely make good VCs and great VCs rarely make successful entrepreneurs…
Exceptions? I am sure there are some…Vinod Khosla for instance and of course, Hermann Hauser…but not a large list, I guess…
Will Price’s comment on this topic and an interview with Larry Sullivan which talks about this but is also very readable – on its own – as it recounts his experiences of managing a global start-up (that got incorporated in 3 countries within 3 weeks!)
Find of the Day: This interview with John Doerr (from 1997) with some timeless advice for entrepreneurs (and VCs); also here.
P.S. Over the coming weekend, I have promised myself to take the VCAT and am contemplating posting the results online (suicidal?)… watch this space.
A few days ago, I did my good deed* of the day by introducing a start-up to a potential customer of theirs.
Nothing unusual about it except that the start-up was not one of our portfolio companies (and neither was I a shareholder or a beneficiary in them).
I am not usually this altruistic 🙂 … but this was a special company.
I was first introduced to them more than three years ago…and at one point we came very close to doing a “deal”. Although we ended up walking away (for reasons of valuation and some other concerns), I continue to remain excited by the opportunity that their technology offers and I am reasonably confident that – with a little bit of fair wind – this could be a great European success story…
Now – as I said before – we actually ended up not doing the deal…so on the face of it, there is little reason to stay engaged and even less to actively help them.
In the larger scheme of things though:
- The world is a small place (and the VC community even more so)
- Life is too short to complain about sour grapes and
- What goes around, does come around (including good deeds and great ideas)…
So nurture your relationships carefully – good friends and great entrepreneurs are hard to find (and harder to maintain).
For more on good deeds (or good turns, to be precise) read this. I was a Boy Scout once – old habits die hard!
* Scout logo courtesy: http://pinetreeweb.com/wosm-india.jpg