Tuesday, May 28, 2013

VC Whisperer Thought #5: VCs and Entrepreneurs Need To Smarten Up and Hire Investment Bankers

VCs and entrepreneurs need to smarten up. You aren't good at everything, you don't have infinite amounts of free time, and you don't know everyone.

So why is it that both VCs and entrepreneurs feel they are particularly well-positioned to spend all kinds of time raising money? Why are both groups so allergic to investment bankers?

Does the CEO of a startup do all the coding and UX work himself? No, he hires experts to do the work for him. Since when did it become the CEO's job to spend his time on the road meeting with investors? That's downright negligent in my opinion. And it is even more negligent if the VC encourages this behavior. The entrepreneurs I back should be focused on building their business, not running around doing tasks for which other people are much better equipped.

Granted, the founder of a startup shouldn't be hiring bankers to raise those first couple rounds of financing. It's helpful to do that yourself. You refine your pitch, you get great feedback. But once you're at the point where the business is raising $10M+, why wouldn't you bring in experts for help? Why wouldn't you offload a lot of the grunt work required to make such a financing successful? And why wouldn't you expand your own network by paying for someone else's. The time saved that you can then use to grow your business is invaluable. And if you're the VC who thinks you can play investment banker for your startups and make introductions, then I'm sure glad I'm not your LP, because clearly you've lost sight of what's important - finding and getting into great deals, not going on roadshows with your companies.

The stigma and aversion to investment bankers in the VC/startup world needs to end. In fact, the best VCs and their most successful portfolio companies often use investment bankers on a regular basis. I've worked with some of them. Smarten up people. Stop thinking you can do everything yourself, and even if you can, it's not a good use of your time.

VCs and entrepreneurs shouldn't be spending all their time raising money.
Leave the financing work to the financing experts - investment bankers.
Don't assume you can or should do everything yourself.

Monday, February 25, 2013

VC Whisperer Thought #4: Networking Is Important So Get Better At It!

Being successful in business is all about people. If you can't deal with people or connect with people, then don't go into business. Be a programmer. Be a writer. Find a job where solitude reigns and where you don't have to deal with people, and the politics and sensitivities that comes with that. After years of traveling for work, there are a number of things I've discovered when it comes to successfully meeting with new people, maintaining relationships, and then extracting something useful from those relationships.

This will be part 1 of a multi-part series on some of the best tips and tactics I've learned so that you can get the most out of your networking and relationship-building efforts.

Don't go in with an agenda.

Forget about building a relationship. Just securing a meeting with someone you've never met is virtually impossible if you go in with a very specific agenda. Unless you have something that will guaranteed make the person you're trying to meet immediately richer and with no effort. Then anyone will take your meeting. Barring that, it's far better to meet with people when you don't have anything to ask for. It's much more genuine. People feel like you're taking the time to talk to them and get to know them without wanting anything from them. It makes meetings much more relaxed and generally people will open up more.

Going in with no agenda implies that you need to plan your networking far in advance. It means you need to get to know people before you have any need for them.

Give before you get.

This one should be obvious, but there's no better way to build a relationship with someone, than by offering help first. By investing in a relationship before you ask for anything, you've created goodwill. And it's human nature to want to give back to someone who helps us. If you give before you get, when it comes time to ask for something, the other person will be far more likely (virtually guaranteed) to go out of their way for you. That's powerful.

Make sure to follow up.

This doesn't mean follow up with a summary of everything you want, and everything you asked for. This means take the time to write a thoughtful note that the other person will remember.

Being successful in business depends 100% on your ability to deal with people.