Friendly And Not So Friendly VCs

A while ago Christoph wrote a post titled Good VCs, Bad VCs which illustrates how we perceive our job as VCs and what we aspire to act like. After a discussion we had around this a few weeks ago I tweeted out the following question: “What actions by VCs do you consider most 'founder friendly' or most 'founder hostile'?’”. Quite a few folks replied (many thanks!) and the results are very interesting. You can review them here (twitter) and here (facebook) and below you can find a summary of what was most frequently mentioned in both camps.

Top unfriendly VC moves

Pre-investment behaviour / terms

1. Lack of transparency in the decision making process

2. “Going dark”, i.e. no response

3. Multiple and/or participating liquidation preferences

After investment

1. Ousting founders

2. Forcing founders to do things/deals they would not want to do

3. Not picking up pro-rata (bad signaling)

Top friendly VC moves

1. Being fast, responsive and transparent, on all fronts, pre and post investment

2. Helping founders grow

3. Offering pro-rata/money in difficult situations

While nothing on the list was totally unexpected, I was surprised by the frequency with which the quality, transparency and speed of the fundraising process and communication with VCs got mentioned versus other aspects of the founder-VC relationship. This tells quite a bit about how founders perceive the responsiveness and quality of VCs in general and also points to the area where VCs can improve the most. It also indicates what being ‘founder friendly’ really means - and it is not necessarily paying crazy prices or being extremely light on terms, but goes more into the direction of being a reliable, transparent and quick partner.

If you want to help us understand the fundraising process from the point of view of an entrepreneur a bit better and hopefully become a better VC as a result, please consider answering a few questions about this in a survey on fundraising that Christoph is currently running.

13 responses
Pawel, even though I totally agree with you, you are not answering single most important question. From your LP's point of why is it worth to be "friendly". This what I am lacking and a do a lot of thinking about.
@Bartek - I think this is simple - if you are considered friendly, you will get recommended and people will wanna work with you again. If you're considered an ass... - the news will go around. Maybe you can make occasional buck by being unfriendly - but I do not think this is a good long terms strategy in VC + the above does not really indicate that friendly = naive. Also, do your LPs say it is good business to be unfriendly? :)
In Eastern Europe IMHO being unfriendly is ofther associated with being strong / effective. This is stupid but believe me people believe in this ;-). But you are right if founders are reasonable the should search (best one) for Friendly VCs
So what is the reputation of Eastern European VCs in general and how successful are they? :)
is not MCI successful ;-)?
n = 1
Well, I think both of you Pawel, Bartek, nailed it. If someone want's to be stuck as Easter European VC then let's be an asshole...!
For the record: never met Bartek but Pawel input during Techstars was good and useful.
Some great insights into what makes a great investor and board member - starting at 06:35
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