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I think it changes a whole lot based on who you work with. In my experience it seems like 75% of VCs are neutral. They try to be helpful, aren’t really, but do

I think it changes a whole lot based on who you work with. In my experience it seems like 75% of VCs are neutral. They try to be helpful, aren’t really, but don’t get in the way, and their cash is green. They can email me two times a day if they want, it won’t help me any more (and will be annoying). 10% are actively harmful. Either they have really bad advice, are a distraction, or try to lead your company down bad paths. 15% are incredibly helpful (maybe the 10% and the 15% should be switched), and you should do whatever it takes to work with them. They can think through problems instantly, see 15 steps ahead, understand where you are and what you should be focusing on, know everyone, and actually put in the work. I’ve been shocked at how helpful some VCs can be in eliminating most of your biggest problems. It’s just rare that happens. That’s why I’m surprised to see how little “track record” was valued. With few exceptions that’s my #1 consideration when deciding who to take money from, or perhaps #2 begind “reputation.”

dalbasal 8y ago
Are you accounting for help, in the area they're supposed to be good at? Finding further investment, recruiting senior people (eg a CFO), finding exit options, finding acquisition targets, legal, accounting... Thoses aren't things you need everyday, but outside of most founder's expertise on the days they do. I mean it's great if they can help with product strategy, or technical stuff but.... they're finance people. I feel like setting this expectation might lead to no good.
- austenallred 8y ago
  Yes. Good VCs can do the above - that’s a layup, mediocre VCs try to help at the above but are hit and miss on their helpfulness.
cabaalis 8y ago
I've taken some money from VCs. (~1m over 2 rounds.) In some cases they wanted to be very active in the business, in others they were more passive. The ones who wanted to be very active were problematic, mostly because the founders did not welcome their strategy contributions and there seemed to be an inherent suspicion of their intentions. When the business failed, this only amplified. It would seem to me the best situation would be a VC who actually has industry experience in your target market. I'm not talking about SaaS experience or hardware/software xp, but connections and experience in the actual industry you are trying to disrupt.
vannevar 8y ago
The big question is whether the 10% that are bad and the 15% that are good are consistently bad and good. If for some companies the bad are good, and vice versa, then it pretty much boils down to speed and terms. The rest is a crapshoot.
- WalterSear 8y ago
  I was part of a YC company that died due to our CEO following well meaning, but bad advice from VCs and advisors - it was a consumer technology play, but all the advisors had made their money opening online shopfronts. So, we burnt time trying to find consumers, and the product and service languished.
  - ScottBurson 8y ago
    I suspect it's mostly not a matter of some VC/advisors being good and others being harmful across the board, but rather the appropriateness of a particular VC/advisor for a particular business. The Dunning-Kruger effect is probably very much in play: someone who has been successful with one kind of business may tend to overgeneralize the applicability of what they learned.
- rb808 8y ago
  Not only that but for large VC firms the service and advice provided will not be consistent, depends on which people you interact with and which year you're getting support.
- joewee 8y ago
  there are too many variables to say a vc’s advice is consistently good or bad, but I imagine those that are helpful with valuable advice will consistently be in the orbit of successful companies and entrepreneurs.
louisswiss 8y ago
That's a nice overview but IMO it fails to take into account how the founders (oftentimes inadvertently) influence how helpful/harmful a VC is. The most common (negative) example of this I've seen is when founders sell the VC on the solution, not the problem they're solving. Everything starts out fine (you have a VC who is really excited to help you build and sell product X, even if they don't really care about problem Y). But then you realise that actually, the market wants you to pivot slightly to product Z to solve the same problem Y. And that's when the VC pivots from being helpful to harmful. There are probably multiple other examples of how founders can influence the value-add of their VCs, but that's the big one that springs to my mind. And I bet it accounts for 90% of the 'harmful' instances.
- dopamean 8y ago
  > The most common (negative) example of this I've seen is when founders sell the VC on the solution, not the problem they're solving. There are so many aspects of my work life that this applies to. Sometimes product managers will suggestion a solution to a problem instead of presenting the problem. Often times their solution needs work and unless caught early a lot of time gets spent going down the wrong path. Another time this happens with the whole "xy problem." Where I or a team member have problem X, we come up with solution Y but have trouble implementing it. Then we ask for help with solution Y without knowing that maybe it's not the best solution and what we really should have asked for help with is problem X. I think we could all do better by thinking more about what problems we're trying to solve rather than being married to our potential solutions to those problems.
shantanugangal 8y ago
> That’s why I’m surprised to see how little “track record” was valued. Isn't there a Glassdoor for VC firms? I would love to use it if there was one! Presume they will need to bootstrap and can't VC funding ;-)
- alexnewman 8y ago
  The funded but it never took off

dalbasal 8y ago

Are you accounting for help, in the area they're supposed to be good at? Finding further investment, recruiting senior people (eg a CFO), finding exit options, finding acquisition targets, legal, accounting... Thoses aren't things you need everyday, but outside of most founder's expertise on the days they do. I mean it's great if they can help with product strategy, or technical stuff but.... they're finance people. I feel like setting this expectation might lead to no good.

austenallred 8y ago
Yes. Good VCs can do the above - that’s a layup, mediocre VCs try to help at the above but are hit and miss on their helpfulness.

cabaalis 8y ago

I've taken some money from VCs. (~1m over 2 rounds.) In some cases they wanted to be very active in the business, in others they were more passive. The ones who wanted to be very active were problematic, mostly because the founders did not welcome their strategy contributions and there seemed to be an inherent suspicion of their intentions. When the business failed, this only amplified. It would seem to me the best situation would be a VC who actually has industry experience in your target market. I'm not talking about SaaS experience or hardware/software xp, but connections and experience in the actual industry you are trying to disrupt.

vannevar 8y ago

The big question is whether the 10% that are bad and the 15% that are good are consistently bad and good. If for some companies the bad are good, and vice versa, then it pretty much boils down to speed and terms. The rest is a crapshoot.

WalterSear 8y ago
I was part of a YC company that died due to our CEO following well meaning, but bad advice from VCs and advisors - it was a consumer technology play, but all the advisors had made their money opening online shopfronts. So, we burnt time trying to find consumers, and the product and service languished.
- ScottBurson 8y ago
  I suspect it's mostly not a matter of some VC/advisors being good and others being harmful across the board, but rather the appropriateness of a particular VC/advisor for a particular business. The Dunning-Kruger effect is probably very much in play: someone who has been successful with one kind of business may tend to overgeneralize the applicability of what they learned.
rb808 8y ago
Not only that but for large VC firms the service and advice provided will not be consistent, depends on which people you interact with and which year you're getting support.
joewee 8y ago
there are too many variables to say a vc’s advice is consistently good or bad, but I imagine those that are helpful with valuable advice will consistently be in the orbit of successful companies and entrepreneurs.

louisswiss 8y ago

That's a nice overview but IMO it fails to take into account how the founders (oftentimes inadvertently) influence how helpful/harmful a VC is. The most common (negative) example of this I've seen is when founders sell the VC on the solution, not the problem they're solving. Everything starts out fine (you have a VC who is really excited to help you build and sell product X, even if they don't really care about problem Y). But then you realise that actually, the market wants you to pivot slightly to product Z to solve the same problem Y. And that's when the VC pivots from being helpful to harmful. There are probably multiple other examples of how founders can influence the value-add of their VCs, but that's the big one that springs to my mind. And I bet it accounts for 90% of the 'harmful' instances.

dopamean 8y ago
> The most common (negative) example of this I've seen is when founders sell the VC on the solution, not the problem they're solving. There are so many aspects of my work life that this applies to. Sometimes product managers will suggestion a solution to a problem instead of presenting the problem. Often times their solution needs work and unless caught early a lot of time gets spent going down the wrong path. Another time this happens with the whole "xy problem." Where I or a team member have problem X, we come up with solution Y but have trouble implementing it. Then we ask for help with solution Y without knowing that maybe it's not the best solution and what we really should have asked for help with is problem X. I think we could all do better by thinking more about what problems we're trying to solve rather than being married to our potential solutions to those problems.

shantanugangal 8y ago

> That’s why I’m surprised to see how little “track record” was valued. Isn't there a Glassdoor for VC firms? I would love to use it if there was one! Presume they will need to bootstrap and can't VC funding ;-)

alexnewman 8y ago
The funded but it never took off