Here's something that drives me nuts. When they hear that I'm with a VC firm, many entrepreneurs will say that the only value we add to a company is money. Nothing could be further from the truth.
While much of our success can be attributed to front-end diligence, research and deal-making, the best VCs are more than good pickers. In fact, the profile of a typical VC is starting to mirror that of a successful entrepreneur, and the next generation of VCs will likely have resumes that are heavy on entrepreneurial operating experience. Here are some of the benefits, beyond money, they can have for you.
Experience on boards. VC partners sit on boards--lots of them. If you wonder what a successful VC's calendar looks like, take each investment and multiply by four for quarterly meetings. Triple that for two travel days on each end, and pretty quickly you get to 200 days a year out of the office.
Sitting on boards is not just a means for investors to monitor their investments; it's also a formal platform from which to offer expertise and value without interfering in day-to-day operations. Plus, the fact that investors are involved with so many companies means they bring ample experience. When it comes to board/management relations, they have seen it all.
Help with fundraising. Your existing investors want to see upticks in valuation. It can be amazing to watch them shift from skeptics to salespeople once they have skin in the game.
When it comes time to raise funds for your next round, your VC can be your best advocate. In fact, chances are that your investors have been profiling other VC firms to form an investment syndicate all along. Don't hesitate to lean on your investors for introductions to those other firms.
Help with recruiting. VCs maintain giant contact databases of senior talent, and it's common for large firms to keep bullpens of specific executives: a starter to launch a business, a setup person to get it in top shape for a sale and a closer who can guide a company through the sale. As a business owner, this saves you the hassle of trying to find talent who can take your startup to maturity or set it up for the sale of your dreams.
Because of this dynamic, the best VC firms can start to look incestuous and protective of their trusted talent network, recycling them again and again. But this is a sign of a firm that knows what it's doing.
VCs have come a long way from the suit-clad bankers and lawyers who didn't appear to have any idea of what your industry was all about. Today, as you forge your investor relationships, don't hesitate to ask about everything they might bring to the table. The success of your business depends on it.