The difference between a good VC and bad VC

it is a long document is recommended. Christoph Janz is risk investment institutions Point about Nine Capital, founding partner, is also a dedicated novel writers. His article “the difference between a good VC and bad VC” detailed combing his own eye good VCS and bad VCS, some of the most critical difference between VC professionals and entrepreneurs are worth a look. As he puts it, of course, in reality may never appear so perfect VC, but there is a direction, always good.

source: entrepreneurial public account search: liquor-marinated entrepreneurship

Good VCs and bad VCs

the author: Christoph Janz translation: always believe in miracles @ Ling
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by Ben Horowitz “good product managers, product managers bad” [1] and Stefan Smalla of the good leadership, bad leadership inspired [2] two masterpiece, I also try to make me a good VC (Venture Capital, Venture Capital investment institutions. Hereinafter referred to as “vc”) understand the comb. Thank you for the Point about Nine Capital colleagues to give valuable advice, especially Michael, Mathias and Rodrigo three, they read the first draft of this post and give a lot of pertinent advice.

we know that the below described in the ideal of “VC” may never come. But as Stefan Smalla response for a reviewing of the declaration of his leadership when it comes to it: “there is no perfect person, but towards the ideal effort is always good. Little by little.”

1. A good vc will best efforts to support its investment company

a good vc will bring added value

a good vc for the company it cast is on call 24 hours a day. If a is for entrepreneurs who need it, it would be best, rolled up his sleeves and call social resources, ready to jump on a plane start – to help them. A good vc is sometimes a recruitment officer, sometimes is a beta testers, sometimes it is a private coach, and it is not afraid of things themselves. This kind of thing “can’t scale” (scalable)? Go to your “scale”. If you need you to help out, the firm’s founder, then he/she don’t care about the most is that it can “scale” for the VC.

a good vc not only respond to the demands of founders. A good vc clear its firms are faced with the problem at present, and actively seek solutions at any time.

good risk investors make their founders come into contact with all partners and not just “their” partners.

a good vc understand its founder can provide help is limited, so it will use the professional knowledge of others. In particular, it will be happy to contribute to the concerned between entrepreneurs through all kinds of BBS, online and wire communication each other’s experience.

a bad venture will clinch a deal in the stage of excessive commitment, and once after clinching a deal will not be fulfilled.

“we regard themselves as providing services of the company. Every day we are trying to gain reputation and brand. We strive to provide added value, and wish to become a most execution for the founder members of the board of directors, we every day in an effort to win the reputation.” – Bill Gurley (Benchmark Capital)

a good vc is humble and don’t try to control the

a good vc understand between investors and founder, there is a company operating situation of information asymmetry. He understood that founding people spent countless time and energy in their industries and customers, and get closer with team members, and investors know about startups is very superficial. He knows a lot of his problems, if not most) are entrepreneurs have been considered, also know that even if he can provide a lot of input, advice, and a different perspective, but it should not be too carefully for founders or trying to make a decision.

a good vc understand for founders to cope with the investor is a very time consuming, so will try to seek a balance, can closely to provide value, and can not affect the company’s management.

a bad venture will overestimate their insight, trying to very fine and control corporate affairs as founders need to sustain a burden.

a good vc will fully support and to avoid conflict with part of the portfolio

a good vc, do not invest in two or more competing company directly.

a bad venture, will be speculation in multiple similar companies in order to get their own interests, rather than put all your eggs in one basket in a company and focus on support their portfolio companies.

relative to occupy a little cake, a good vc will try to do big whole cake

if a company is the introduction of another vc, whether it be the same round of investment or later rounds, a good vc will help founders to attract better joint investors. A good investment institutions will also take the initiative to do so – when it is found that the company has more potential opportunities, will suggest more valuable joint investors into financing round.

a bad venture to worry about is if the joint investors to join our company, so he will get less. So he does not encourage founders seek other investors, he can maximize his share in the company, rather than a really good thing to the company.

a good vc will not take advantage of the investment company

a good vc will use very simple handle yourself. A good vc may hard negotiations, but it doesn’t try to secretly set that will damage the terms of the founders to calculating start-ups. A good vc will make the contract easier – in a most returns from the best investment industry, demanding to protect anything can go wrong and does not make sense.

a good vc wouldn’t abuse, even if it might be cast by it in multiple, founder of the resources available at different periods in the company.

a bad venture will negotiate the terms of the agreement, it will take a lot of time (and legal fees) struggle with how to handle various subtle could not have happened. It may even try to take advantage of injustice, unusual, and it is difficult to understand the terms of the founder to fraud.

when she get chips from an investment company, such as when a company lack of cash and to make the transition to investors seeking financing, a bad venture will use its hands chips take advantage of the company.

2. A good wind an maximum respect to treat every entrepreneur

a good vc at any time the value of respect for the founder of time

a good vc rarely will be rescheduled with the founding of people’s meeting, but never on time to attend. At the meeting with the founders, his cell phone will only stay in his pocket.

a bad VCS often rescheduled at the last minute and the founder of the meeting. Once the last meeting, he is often late. During the meeting, he will start a bored check email on your phone (or Facebook).

“if someone is late, I will be fined $10 for every minute. This is when I was in the entrepreneurial experience. When you are a beginner, you and your company is the life and death together. You work hard, do not want to waste time to do the most thing is to wait for in an investment agency’s office in the lobby.” – Bill Gurley (Benchmark Capital)

a good vc will be professionally deal with “don’t want to”

know 99% of the startups will be deleted, a good vc will form a team and make an evaluation of trading process to ensure that the founders get timely feedback. A good investors also will try to give an explanation for why it is not suitable for investment in a company, although because time is limited, is unlikely to detailed feedback for each case.

a bad venture will be to inquiries noncommittally, or often not reply. When it screen out a potential investment, it is not going to entrepreneurs to provide useful feedback. A bad investors often delay does not make a decision, make its own choice.

note: this is our the Point about Nine faces the biggest gap between reality and vision. We strive to do better, but every month for 200 potential investment appraisals, this task is very difficult.

a good vc will only when it decided to clinch a deal to sign the agreement

a good vc will only when he was really want to throw will sign the term sheet. After signing, he would only bad things found in due diligence will withdraw, only when it is very rare. A good vc can let oneself of transparency of the project evaluation stage, and tell startups how much his own interest, so the founder can more accurately estimate time and rhythm of financing.

a bad VCS sometimes to sign a term sheet to ensure that their investment “may” – in some he is not sure whether he really want to vote. A bad investors often give a person a kind of illusion, let a person feel he’ll be able to determine the and pushing this matter quickly.

3. A good investors’ interests and the interests of the LP (LPS) is consistent with the

a good vc is inspired by a profit sharing, rather than the management expenses

a good vc will strive to optimize in order to obtain higher profits and lower management cost. A good vc will also pay for the most of the management to the investment ability and can use it to help it firms, such as the formation of a team of experts and consultants to provide the resources you will need to startup), rather than a large amount of wages. A good investor will be large amount of funds it, instead of depending on GP (general partner) commitment of money [3] as a burden.

a bad venture in has not been able to make the LP [4] make a lot of money when I was thinking about making money. It wants to minimize the GP (general partner) capital commitment to maximize their income.

4. A good vc is dedicated, brave, modesty and the pursuit of the diversity of

a good vc is focused on

a good vc will be according to the geographical location, specific industries, a certain phase of financing to focus their investments and investment philosophy.

a bad venture capital investment will be very broad. Compared with for a couple of things have a deep understanding, it in fact what all don’t understand. Provide useful support both hinder it, also can let it can’t the first time found that the best investment.

a good vc is bold

a good vc will be bold attempt, it’s very independent. While respecting the opinions of other investors, too, but it often invest in the screen out of others’ company. A good vc also not afraid to admit mistakes and failures.

a bad venture’s greatest power in the fear of missing out on something. It has no professional ability or the courage to think independently, once the other investors want to cast a project it becomes very interested in it. If an investment failed, she would try to use a pr wrap the whole thing was like a success story.

a good vc is modest

a good vc know luck and chance is very important in the investment. What it continues to prove himself, because the level of vc recently it is equal to the level of an investment. A good vc will not feel good about themselves, he would be a good listener and often says “I don’t understand”.

a bad venture after the lucky one or two, will think you are a genius. A bad venture you feel very good, and is the kind of person who often hold the low efficiency of the board of directors, because they love the feeling of his speech.

a good vc pursuit and approved diversity

a good vc will be willing to invest in and work with all sorts of different founders, the founders say different language, from different culture, different skin color, ethnicity, there are different gender, different religions, different age, and have different personalities and preferences. With Dave McClure’s words, he knew that “these people can open new markets and landmarks, could also benefit from others may ignore or unwilling to pursue adventure, to create a potential greater return on investment.”

a bad VCS prefer to vote for people who like it.

“we abide by the diversity that commitment from the irresistible desire to explore, we want to understand the strong curiosity of the world, is the result of a moral mission and intellectual humility (intellectual humility), hoping to make us and others to become a more vast and wonderful one member of the international community and family.” – Dave McClure (500 startups)

5. A good vc and willing to give back to long run

a good vc investment is a long-term relationship between

a good vc did each thing long-term results. It wise men are like a German proverb says, “life there are always meet again”. So it will work hard to create a win-win situation.

a bad venture will from others for short-term gain, and sacrificed relationships and long-term interests.

a good vc will share experience (but to keep private information is absolutely confidential)

a good vc will be happy to share with startup and investment experience, because they know that when The Times this is not a zero-sum game.

a good vc will never disclose to people outside the company highly confidential information, such as business plan founder unless specifically allowed him to do so.

a bad venture would keep his mouth shut in share experiences – and is flawed in terms of highly confidential information confidential.

a good VCS want to make the world better

a good vc care about others, and know that in addition to money and many more other things in life. Whether investment in environmental protection technology, doing charity or participate in community activities or other things – it’s all have a strong desire to make the world better.


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