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December 11, 2013

Ed Zimmerman wrote a nice article in the WSJ about the value of VC Associates. It’s a great read, and as a former VC associate, I agree with many of his points. But VC associates continue to get a bad reputation, and I totally understand why.  It’s not that VC associates are bad or ineffective.  But some are.  And almost all are prone to some bad behavior at least sometimes.  Partners are prone to bad behavior too, but because they are the “decision makers”, founders are more likely to just shrug their shoulders and move on (although everyone has their limits). Here’s my 2 cents on what VC associates should do (or not do) to avoid being annoying and unhelpful to founders.

1. Be authentic and transparent. Every entrepreneur can look on LinkedIN and see that the amazing operating experience you claim to have was acquired in 1 summer internship 2 years ago. Don’t feel like you need to be different or more than you are.  Do be honest about why you are or aren’t interested in a company.  Do be honest about what your firm’s process looks like, whether you have air cover from the partners at your firm, and what to expect next.  Also, be honest about how interested you really are in a company.  If you are just trying to build a relationship over time, but your typical goal is to invest after a company has achieved significantly more, say that.

2. Pre-wire the entrepreneur and your partners.  I’ve seen this many times, where an entrepreneur goes into a meeting with one or more partners at the firm, but their expectations for the meeting are completely different from what actually transpired.  I think it’s just courtesy to do the extra work to pre-wire the entrepreneur so they know what they are getting into, and pre-wire your partners so they know what to expect and the entrepreneur doesn’t feel like an idiot.

3. But measured about your enthusiasm. It’s easy as an associate to lead entrepreneurs on with overly optimistic messaging. What happens is that the associate is eager to show productivity and get “credit” for “seeing” a deal early.  So they convince the entrepreneur that the firm is excited enough to do a deal quickly, so that the founder is willing to come in to meet the partners.  During the meeting, it becomes clear that there is no way that the firm will invest.  But from the associate’s point of view, they get credit for surfacing credible deals to their partners, even if it pretty clearly doesn’t fit what the firm is looking for. Ultimately, this will hurt everyone.

4. Be careful about mirroring your partners too much. This is a subtle point.  Because VC is an apprenticeship business, it’s easy for an associate to start to mirror the behaviors and style of the partners that they work with.  In many cases, this is great, but I’d be careful about taking it too far.  First, I really think that one’s best strategy is authenticity, and you need to find your own style and personality.  Second, I’d be wary about picking up some behaviors before there is substance to support it.  The role of a VC makes it very easy to develop an over-inflated ego, and on top of that, many VC  partners have had a ton of success, and have a fair bit of confidence to go along with it. It’s easy to start mirroring the behaviors of a confident (maybe cocky) person, but without as much substance to go along with it, you end up looking pretty lame.

5. Provide real help, not noisy activity. Associates can really help portfolio companies.  But it’s also really easy to start wasting their time. Most likely, as an associate, you aren’t going to contribute that much pontificating at board meetings about strategy.  You also are probably not going to be the person that brings on the SVP of sales for a series B company, or their next CTO.  You probably aren’t going to have all these great ideas and introductions that will prove valuable to the CEO of a company you are shadowing. But you can help. Figure out what the hiring plans are for the companies you are supporting, and start scouring the market for the best people you can find that fits those roles. It’s a great long-term investment, because the mid-level PMs, sales people, and software developers of today may become great founders down the road.  Also, get to know the next level of the management team of the companies you support. It’s amazing how VC’s tend to spend a huge % of time with the founders and CEO of a company, but relatively little time with the VP or Director level executives.  Get to know them, understand their more tactical needs and try to produce for them.  Oh, and bringing in customers is always a good thing.

Overall, I think humility is really important.  When I think about many of the former associates I know who are now partners at their respective firms, I find that most of them were surprisingly humble and empathetic towards entrepreneurs, and there wasn’t at all a sense that they needed to justify themselves because they were just lowly associates.   Couple that with incredible hunger around helping founders, and strong intuition about how markets are developing, and you have the makings of a really great VC.

  • http://www.semilshah.com/ Semil Shah

    Point #4 is pure gold (and sad).

    • robchogo

      Thanks! Totally happens though, right?

      • http://www.semilshah.com/ Semil Shah

        Yes, you can even see it on Twitter, in their tweets. It’s very true.

  • brucejfriedman

    Good advice for both associates and the CEO’s that leverage their talents!

  • Juan Ochoa

    Thanks for these insights, this is great advice. I will carry this close to me in my journey as at my startup as CEO. Know who to align myself and companies best interest in the long run.

  • Anthony Chen

    all really great points! think #2 hits home for a lot of younger vc associates.

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