My Quest as a VC to Support Founders
I frequently get asked two questions:
1) “What’s your vision for [insert portfolio company name]?”
2) “When do you plan on selling [insert portfolio company name]?”
These are asked when I’m talking to entrepreneurs, interviewing job candidates on behalf of a company, or in other discussions.
A lot of investors answer these questions from their view rather than the founder’s view. But that’s backwards in my mind. I fundamentally believe that founders are the ones who dictate the answers to these questions.
Here’s why. And here’s how I respond to those questions…
The vision for a company is set by the founders/CEO/team. As investors, it’s not ourcompany. It’s the founder’s company. That might be different if we owned the majority of a company, but as a minority, venture investor, it’s not our company.
The most important role investors can play is to do everything in our power to support the founders and the teams we invest in. That doesn’t include setting the vision for companies. But it also doesn’t mean mindlessly agreeing to whatever founders say/do.
It means supporting the founders in the vision they set by challenging their assumptions, providing guidance, being guardrails so they stay focused, and being a sounding board. It means pushing them to become the best leaders they can be and to build the best company they can build.
So when someone asks me for my vision for a particular company, I immediately respond with the founder’s vision and be clear that it’s the founder’s vision, not our vision, and we are there to support them.
Similarly, supporting founders in their vision also means supporting them with the timeline that makes sense to them for selling their company.
I learned from a friend and mentor of mine, Jason Mendelson who co-founded the Foundry Group, one of the most successful VC firms in the country, that the time to sell a company is when the founder wants to sell it. That’s his mantra for an exit timeline.
That’s such a unique mentality in the investing world. But it’s so valuable and it’s how it should be.
If a founder wants to sell his/her company, then the VC should work with him/her to validate it’s the optimal time and challenge his/her assumptions (as with any decision-making process), but then support him/her in the final decision that is collectively reached. Inversely, if a founder doesn’t want to sell, then it’s not time to sell.
VCs live and die by their reputation. The founders they partner with become a big storyline in their reputation. If a VC controls the vision or dictates exit timelines, that brings reputational baggage which could/should affect the VC’s ability to get future deals. But more importantly, it’s not the VC’s company. It’s the founder’s company.
That’s my lifelong quest as an investor: to support the vision founders set for their companies. I’m in this business for the long run, not for quick hits. I can’t imagine another, more fulfilling way to go about it.