March 11, 2010
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.