As someone new to venture, what can I do to be the most helpful I can be to founders and their companies?
With SXSW Interactive winding down, this is a question I’ve been asking of investors whom I’ve met there. Less than a month ago I worked for a limited partner in private equity and venture funds — now I work for a direct investor, climbing my way through an exciting new learning curve. In that prior life I would do diligence on the investment firms: analyzing their track records, meeting with their teams, determining whether they have a sound enough process in making the investments that they make. When an investment was made into that firm’s fund, the understanding was that the firm would not stray from the limited partnership agreement and the limited partners would monitor the fund as intelligent sources of capital. But the focus remained at that higher-level, as the limited partners by definition do not manage the underlying companies of a fund.
Now, however, I have the task of helping build and grow companies. This step forward, this step closer to the company-level has turned my role from a passive one to a more active one, and in this active role there will be an increased number of ways for me to impact an investment. But with more touch points come the potential for more complications. So the question for me becomes how can I move thoughtfully without, you know, breaking things?
I realize that this question simultaneously has many answers and no answers, but collecting as much feedback as possible has been enlightening. Some of the answers I did receive are included below (though they are not exact quotes, as my memory is less than photographic):
Keep a separation between oneself and the company to avoid meddling too much.
Fail, fail, fail often and learn from those mistakes.
Send them all the potential business and customers that you can.
Always keep them fundraising.
Keep their burn rates under control.
Take a nuanced approach in helping them find the correct upstream investment partners.
Build a community among your portfolio of companies.
Do three deals right away so they can’t be pinned entirely on you.
So the last one was told to me jokingly — but this is all still a start. I’d love to hear more feedback on this subject, as not only do I want to be as great a help as I can to founders, but I’m sure that many other investors feel the same way. They want to look back years from now at the companies with whom they partnered and be able to say I helped those founders build that.That, to me, seems like a place that companies and their investors would want to go.