Founders Guide: VCs are People Too

I expect a lot of flak from other founders for this one

A bit of honesty here.

When I was starting/running my first company, I didn't really know how to interact with investors. I mean, like, what was an investor anyway? You have this person who wields massive amounts of capital,¹ but also is not necessarily an expert in software or hardware or supply chains or biotech or space tech or AI or whatever VC tends to deploy capital to. A person who is invested — both literally and figuratively — in your company, but also doesn't really mind if it fails since "that's the business model." A person who isn't your boss, but also kinda is your boss, but also really is emphatically not your boss? Venture always struck me as a land of strange contradictions. As an industry, I always thought it odd that the field is supposed to be all about putting money in long-shot bets, but also seems to follow trends more consistently than a tween in middle school.

I've been in the startup world in some capacity for 7 years now. And, though it is a bit trite to say, I eventually realized that venture capitalists are people too.

This was sort of eye opening for me. Maybe because of Shark Tank, or the Social Network, or just the general cultural zeitgeist, I sorta believed that the average investor-founder relationship was adversarial by nature. Even though a lot of entrepreneurship social life is driven by VC (e.g. various SF hacker houses, incubator programs, the perennial investor dinner), I definitely think the broader startup ecosystem pushes the angle that investors and founders are, if not enemies, at least not allies. Stories about how so-and-so investor messed with such-and-such company abound, easily getting to the HackerNews frontpage. For me, personally, all of those feelings were exacerbated by the rest of the executive team at my first company, who weren't exactly friendly to capital. And so I tended to keep the venture class at arm's length.

This is something I now regret.

Venture, like any other field, has fantastic people and not so fantastic people. Yes, fine, it is valuable to be picky about who you spend your time with. But no one really talks about how great some people in venture can be. Some of my closest mentors have come from venture, people who have taken the time to talk me through tough spots or give me advice even though they didn't have money in my companies.

I think it's extremely valuable to build relationships in venture with folks who you like and can come to trust. And not just from the industry networking perspective — there's definitely some of that, but I personally try not to live my life optimizing everything for dollars and leverage. In my opinion, the reason to build relationships with people in venture is because the best investors are smart, interesting people to talk to. Many of them are versed in philosophy and political science and economics, in addition to tech. They have wild stories and useful anecdotes and scar tissue. And, most of all, they are extremely discerning. Good investors, in my experience, have a nose for bullshit and a knack for picking out talent, and will tell you when you are screwing something up. Rare skills, for sure, but being around those people is always great because they make you a better person.

And that, to me, is the foundation of a friendship anyway! You want to be around people who bring out the best in you. All of the friends I've made in industry are people I would have become friends with regardless of their being an investor, because we got to know each other by nerding out on some topic (mostly AI) and then got to talking about other things, and before long it was a multi-year friendship.

That relationship should go both ways. They make you better, you make them better. Folks in venture know they aren't experts in most things, and are constantly seeking input from experts in various fields. Many founders are experts in various fields! The best founders know their markets and their industries inside and out! That is a goldmine of valuable perspective for any investor worth their salt.

And folks in venture also know that they aren't as well connected to other founders as they could be. I can't speak for the average person, but as a founder myself, I know a ton of other founders. Smart, talented people with companies worth investing in. Folks in venture love meeting those kinds of people. And new founders who haven't built a network yet are often looking for first time warm intros to VC. Sitting in the middle and making those connections is a rare win-win-win scenario.

Even though many founders have adversarial relationships with investors, I also think a lot of those same founders kinda expect investors to help them out — give them money, intro them to potential hires, work to land customers, etc. etc. And, yes, that is partially the job description. If an investor has invested in your company, they should probably do all those things. But in retrospect, maybe that perspective is a bit…idk, entitled? Anecdotally, I feel like the same people who get mad about how 'industry insiders' always get their rounds preempted are also the same people who shit on investors every other day. Maybe fundraising trouble is downstream of not seeing investors as anything more than a piggybank!

Like I said at the top, venture capitalists are people too. I help my friends out all the time with no expectation of reward. That's just what friends do. So if you want to build good relationships with investors where they go out of their way to help you, be proactive in helping them out first. Become friends, treat everyone as a person, and you'll be surprised how much easier things become. It's as simple as hitting up a VC you met in passing over email, offering to chat over coffee or intro them to someone, or whatever, without any hidden agenda.

Also, in case the relevant people are reading, I will openly say that I wish I had taken the time to get to know the investors of my first company better, instead of leaving that relationship building to my cofounder. It's a mistake I won't repeat.

PS: I don't publicly praise people as much as I should, so I want to take a moment here to quickly shout out to the people in venture that I've really come to respect. If you are looking to raise or just want to talk about venture / entrepreneurship, I highly recommend reaching out to any of the following people: Sunil @ Ubiquity, Will @ Octave, Keith and Pam @ Pebblebed, Pat @ Anomaly, Molly @ Sourcery, Gautam (formally @ TCV), Morgan @ M13, and Dylan, Gopal, and the rest of the NYC crew @ SPC. Note that I am also an advisor for Ubiquity and TCV, and am an SPC member.

1. If you’re a first time founder, even a $100k check can seem huge.