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.