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Does Your VC Provide “Startup Therapy?”

March 11, 2010

vcmike

We all say this and hear this routinely: “money is cheap, you want an investor who is really going to add value.”

Yeah, sure, of course. But just how should you to expect your VC to “add value?”

There are lots of different examples from recruiting to making introductions to helping with strategy.

But I think an important question entrepreneurs should ask themselves, and ascertain of VCs they are considering working with, is what is their general attitude toward the role of a VC investor. In particular, there is a huge difference between investor-directors who consider it their job to give an entrepreneur instructions as opposed to those who view their role as helping entrepreneurs make good decisions. I just read a great post, called “Startup Therapy.” Here is an excerpt:

Therapists don’t tell you what to do. Rather, they ask probing questions that get you to discover for yourself what is true for you, your situation, and what you want. You’re smart. You’ll make good decisions. But you also get bogged down in daily minutiae and putting out fires, meanwhile missing the big picture.

That’s where this article comes in: To splash cold water on your face, forcing you to face reality and continue to defend or change the important choices inside your business.

I really liked this passage, because it made me think about what I’ve seen great board members do.  They don’t tell you what to do, they ask great questions.

So next time you are picking which VC to work with, ask entrepreneurs who have worked with him/her whether he/she asked good, probing questions that “splashed cold water on your face,” or whether he/she told you what do to.

4 Comments

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  1. Nancy Raulston #
    March 11, 2010

    This is what I do — I call myself “coshrink” because I think of myself as a shrink for start ups. No, I don’t ask them how they feel, but I do try to ask (in a respectful way) the questions that seem obvious to me but not everyone else. I think that there is such pressure on entrepreneurs (and maybe VC’s) to “know everything” that they can avoid looking at the problems they don’t know the answers to, or the areas in which they don’t feel confident. But these are usually the places where they are having (or are going to have) trouble. Of course, it’s not always comfortable to be probed in those areas….

  2. March 11, 2010

    Thanks for the kind words. I’m starting to think I’m morphing into the Dr. Laura of Startups. Not a bad thing! “I am my startup’s dad.” Hmmm….

    I’m a fan of yours as well so it’s nice to make this a two-way connection. Cheers.

  3. March 12, 2010

    This is great advice. I also think there is a new breed of VCs that provide deep, operational value add beyond the initial diagnostic in order to help companies with some of the heavy lifting. Unfortunately, most VCs are not setup this way or willing to allocate a portion of their management fees to build it.

  4. March 18, 2010

    Never thought of it as “therapy” but that’s a good way to put it.

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