This is a subscriber-only article. Join Entrepreneur+ today for access

Learn More

Already have an account?

Sign in
Entrepreneur Plus - Short White
For Subscribers

Investment Without Injury VC investors should know when to limit their involvement--and entrepreneurs should stand firm on where to draw the line.

By Brad Feld Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

An entrepreneur reminded me recently of something I once said that stuck with him: "A good VC needs to know when to get out of the way." The comment was in reference to a fast-growing company that was making a ton of operational decisions in its early stages. We had a tight investor group that trusted the entrepreneurs, and rather than get in the middle of numerous operational decisions--including hiring and salary, office space, employee parking--we spent our time talking at a strategic level and guiding the business.

As a result, the business grew much faster than if we had micromanaged the operation. Sure, mistakes were made--but on the whole, the velocity of the business was much greater than if we'd involved ourselves.

There's a cliché that when a company is successful, it's because of the entrepreneurs, and when a company fails, it's because of the investors or the board. Self-aware investors know that they are supporting characters in the entrepreneurial process, but many VC and angel investors don't. As a result, they become involved in areas where they add nothing, stall the company's progress with slow decision-making and subject the entrepreneurs and management team to endless extra work.

The rest of this article is locked.

Join Entrepreneur+ today for access.

Subscribe Now

Already have an account? Sign In