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Agreed on most points. I’d add that some investors such as a16z or YC add way more value by acting as partners so there is such a thing as more ‘valuable’ capit

by cvaidya1986 6y ago

Agreed on most points. I’d add that some investors such as a16z or YC add way more value by acting as partners so there is such a thing as more ‘valuable’ capital.

playeren 6y ago
Isn't that the case for most reputable VCs? Marketing your product, identifying synergies in portfolio companies, recruiting opportunities and so forth? Or are a16z & YC in a class of their own in that regard?
- borski 6y ago
  It's true for any of the tier 1 VCs. YC and a16z (and others, like SV Angel) have some of the highest reputations in this regard, though.
nikanj 6y ago
Prominent VCs like to spread this message. I'd take it with a healthy pinch of "remember who's bringing the news". Obviously the people offering less money are trying to sell the idea that less money is somehow more valuable.
- borski 6y ago
  Honestly, as a founder...it is. Dumb money is, in effect, pretty useless, whereas 'smart money' comes with additional benefits (provided you and the partner get along, etc.). It isn't guaranteed, but we leaned heavily on our investors for advice and help, especially in those times when we were either at a crossroads or dealing with a situation we had never seen before (b2b enterprise contracts when all our customers were SMB, etc.). Some of them were also helpful just as the equivalent of 'executive coaches.' Being in the weeds constantly means it's hard to be objective sometimes. Good VCs and good angels are usually experienced and helpful, even if the incentives aren't perfectly aligned. They mostly are though; growth helps both the VC and the founder, so in that sense they're aligned. But when deciding how big your option pool should be, your incentives are no longer directly aligned. :)
  - nikanj 6y ago
    Nobody cares if payroll came out of dumb money or smart money. Same for AWS bills, office rent, etc. Having started a few companies, I'd much rather take a long runway than more coaches.
    - borski 6y ago
      You seem to be equating "smart money" with "less money" which isn't true. It may be equivalent, or even more money, possibly with less favorable terms, due to the outsized advantage they provide in other ways. It's nice that you'd prefer a longer runway to more coaches. I prefer a longer runway and more coaches I trust to help me execute; they are not mutually exclusive and you've presented a false choice, particularly in this market which is so founder-driven.

Agreed on most points. I’d add that some investors such as a16z or YC add way more value by acting as partners so there is such a thing as more ‘valuable’ capital.

playeren 6y ago

Isn't that the case for most reputable VCs? Marketing your product, identifying synergies in portfolio companies, recruiting opportunities and so forth? Or are a16z & YC in a class of their own in that regard?

borski 6y ago
It's true for any of the tier 1 VCs. YC and a16z (and others, like SV Angel) have some of the highest reputations in this regard, though.

nikanj 6y ago

Prominent VCs like to spread this message. I'd take it with a healthy pinch of "remember who's bringing the news". Obviously the people offering less money are trying to sell the idea that less money is somehow more valuable.

borski 6y ago
Honestly, as a founder...it is. Dumb money is, in effect, pretty useless, whereas 'smart money' comes with additional benefits (provided you and the partner get along, etc.). It isn't guaranteed, but we leaned heavily on our investors for advice and help, especially in those times when we were either at a crossroads or dealing with a situation we had never seen before (b2b enterprise contracts when all our customers were SMB, etc.). Some of them were also helpful just as the equivalent of 'executive coaches.' Being in the weeds constantly means it's hard to be objective sometimes. Good VCs and good angels are usually experienced and helpful, even if the incentives aren't perfectly aligned. They mostly are though; growth helps both the VC and the founder, so in that sense they're aligned. But when deciding how big your option pool should be, your incentives are no longer directly aligned. :)
- nikanj 6y ago
  Nobody cares if payroll came out of dumb money or smart money. Same for AWS bills, office rent, etc. Having started a few companies, I'd much rather take a long runway than more coaches.
  - borski 6y ago
    You seem to be equating "smart money" with "less money" which isn't true. It may be equivalent, or even more money, possibly with less favorable terms, due to the outsized advantage they provide in other ways. It's nice that you'd prefer a longer runway to more coaches. I prefer a longer runway and more coaches I trust to help me execute; they are not mutually exclusive and you've presented a false choice, particularly in this market which is so founder-driven.