The relationship between an entrepreneur and venture capitalist can take many forms. From the VC perspective, I am friends with some of the entrepreneurs we’ve backed at Romulus and have a professional relationship with others. Since we don’t take board seats at our seed stage startups, our interactions are almost always informal in nature. They result from either the entrepreneur reaching out to us or vice versa.
For those entrepreneurs who I am close with who need specific help at a given moment, there are times when we interact as frequently as multiple times a week. At the other end of the spectrum are those entrepreneurs who I don’t hear from for over six months. Although this may seem like a long time, we make each of our investment decisions with complete trust in the entrepreneur’s ability and motivation to execute. Before an investment, I always ask myself whether I would be able to sleep at night if I didn’t hear from the entrepreneur for six months. If the answer is not a comfortable yes, it’s wise to not invest.
Since my goal is to be involved only as often as the entrepreneur likes, I prefer to let entrepreneurs take initiative in reaching out to me. The entrepreneur already has enough on his plate trying to grow his startup. He doesn’t need the additional burden of managing each of his investors on a weekly basis. This is especially true at the seed stage, where a funding round often includes anywhere from 2 to 10 other angels or VC’s. Instead, the best entrepreneurs resourcefully identify which investors can help their startup reach a specific goal, and leverage these connections at the right time.
That said, some entrepreneurs are more active than others in soliciting input from their investors. They send all investors regular update emails showcasing the progress of their startup and making specific requests. Others go one step further and reach out to individual investors who are best positioned to meet a particular need. For example, I often receive requests to be introduced to a potential employee, customer, or supplier who an entrepreneur sees I know on LinkedIn.
The entrepreneurs who reach out less often have a good reason for their actions. As surprising as this may sound, things may simply be going well at their startup. In other cases they may be relying more on other investors who are able to add greater value to the startup given their domain knowledge and network.
However, there is always the chance that the entrepreneur could actually use the help but hasn’t had the time to reach out, or isn’t even aware of how you could add value in a specific area. This is why, as a VC, I always try to place myself in the entrepreneur’s shoes. I think of what they might need at a particular time and how I could meet this need. I then call them or shoot them an email letting them know I’m available and suggesting a specific way in which I can help out. I’ve found that including a specific input I can provide is better than making an open-ended offer as it shows greater commitment to following through on the offer.
Sometimes the entrepreneur doesn’t need help at that moment. Sometimes they welcome the help but are in crunch mode and you agree to reconnect at a later date. And sometimes they discover that your offer could really add value to the business right now. Regardless of whether the entrepreneur takes you up on your offer, I’ve found that they always thank you for your support. Being in the trenches is tough enough. Sometimes a simple show of support is all that’s needed to keep going.