Just back from 2 solid weeks on the road in Boston, New York & Philly.
I spent countless hours with VC firms, startups & LPs (the people who invest in VC firms). I find these trips invaluable both from a relationship-building perspective as well as stretching my mind about our industry. I ask questions, test theories, debate topics of the day and then reflect upon what I’ve learned.
On my first real day back the first thought I have is that most entrepreneurs don’t manage their VC relationships as well as they could.
My observation is that many entrepreneurs have a strong relationship with the partner at the VC who invested in his or her company. After all, that is the person who best knows the details of your business, who championed your deal and whose head is on the chopping blocks if you become a colossal failure.
But you need to understand that VCs are partnerships. We make decisions as groups. And it would well be worth your while to broaden your relationships within your VC firm. Don’t just assume that if you keep you lead partner updated that everything will be good.
It’s best to think of your VC partnership as a customer. You would never sell to one department and then trust them to manage all of the relationships with other departments who have to use your software. Doing so would expose you to unnecessary risk that you don’t control.
Just as with sales, if you have a strong champion as a partner you will likely be OK. But you need to understand the politics of the VC who invested in you. Is your partner senior or junior? Are the able to get deals approved or do they struggle? Are they the type of person who’s likely to fight for you in tough times or to cut bait to avoid looking bad?
It’s worth contemplating as your fate my hang in the balance if you only have a relationship with one partner out of many.
For starters the obvious reason to broaden your relationships with other partners is that each VC partner brings a unique set of relationships and knowledge. If you’re not tapping into the full knowledge set and relationships of your firms partnerships I can assure you that you’re not maximizing the benefit of that firm.
Is there any reason a VC would not want you to meet with his or her partners? Sure. Perhaps they believe it isn’t a good use of time for each portfolio company to spend time with each partner. I question this logic but I’m sure some firms operate that way. Also, some partners are parochial and probably prefer to control the information flows – even if they don’t even acknowledge that to themselves. But in any event it’s your job to get past objections and meet multiple partners.
An an even more obvious reason to broaden your relationships is that in times of crisis and/or when you need follow-on financing that partnership support might be crucial.
Last year I was speaking with an entrepreneur who has failed to reach his milestones. He had 3 or so VCs and none were reaching out to offer to help with an inside round to bridge him. When I enquired how well he knew the partners at each firm he acknowledged that he really only knew his lead partners. And because he had done a party round (ie nobody owned a big stake in his company) nobody seemed to go to bat for him.
My recommendation was that he spend time with the broader partnership at each firm. He could either put it in the hand of his lead partners to go back to each of their respective partnerships or he could go meet those partners directly and make the case as to why his future would be bright.
I told him that if he did get the support of those partnerships that should be a lesson to him to keep all partners updated on an ongoing basis. Having a broad base of support in any organization is always a good idea.
Another thought is to spend time befriending the associates of your VC firm. Given how few associate jobs exist in venture capital you can be assured that these people are not only super bright & accomplished but also very career oriented and possess many skills that would be useful to you.
People write off associates to easily. I have read many blog posts (including from associates) that say that the real decision power lies with partners so meeting associates can be a waste. I think that’s short-sighted advice. While it’s true that partners generally control investment decisions, associates can be very influential.
I would again draw on a sales metaphor. While the department head might control the budget and the ultimate go / no-go decision on your product, there is often a more junior person working for her that does a lot of the analysis, makes recommendations and in other ways subtly influences the outcomes. In sales parlance we often call this person the influencer.
Associates are no different. I have directly seen deals that got more partner time & attention when associates slammed their fists on the table and equally lose support when associates present damning facts or experiences.
In summary, VC partnerships are like any organization. Your job is to have as broad of political support as possible to get help, introductions and positive decisions when you need them.
Of course your lead relationship will always tell you that they will represent your interests well so meeting other partners isn’t necessary. And in many cases that will be true. But I know that it’s also true that you’re mostly a line-item on a spreadsheet to many partners at a VC and if you can turn that abstract awareness of you into a real human awareness you will increase your odds of positive outcomes.
Given the importance that investors can play at critical junctures in your company – I’d suggest you broaden your VC relationships.