Black & White vs Grey

The problem with entrepreneur – VC relationships is that they are often reduced to black and white:

  • Things are going well: VC is the biggest cheerleader around

  • Things aren’t going well: VC is the biggest pit-bull around snapping at your heels

This leads to completely wrong and dangerous incentives around information sharing: the entrepreneur will be encouraged to share as much positive information as possible and be discouraged to share the bad news.

Of course you want it to be exactly the other way around.

You want to work with any anti-cyclical folks, those that can help you identify key challenges and opportunities underneath the “we’re killing it”-noise and those that “have your back” when flying through turbulence.

Also, most of the time in startups it’s not black and white, it’s grey. Managing the grey part of the relationship is key and it requires a lot of work from both the entrepreneur and the VC. It means being in more of a constant dialogue vs. a pure board meeting relationship.

Of course it’s difficult to find out how black/white or grey someone is, but here’s a couple of things I’d look out for in a personality that I think make a great grey investor:

  • Passion: an investor should really, really, really care about your products, the company and you. Irrespective of €/$ and %. Filter out the “deal makers” that just don’t care

  • Respects the boundaries: an investor that does not secretly think she / he’s the better entrepreneur and accepts their role in advising, not decision making

  • Attitude: good karma is a must

  • Not a badass: I’d take a cool-headed, friendly person any day over a badass. Remember at the end of the day they’re just bad+asses

There’s been a ton of posts about pre-investment “dating” and I’ve written up a longer VC-checklist a while back, so I won’t repeat anything here. I’d just encourage everyone to look out for the anti-cyclical grey folks.

What do you look out for?


2 Comments on “Black & White vs Grey”

  1. I’m a first timer at raising investment, but I want angels/VCs who have the same passion for the problem as well as ethical red lines. It’s easy to make extra money if you chuck morals out the window (even if you’re within the confines of the law), and my greatest fear is that a “maximize shareholder value [at any cost]” mentality will force the company to cross such red lines.

    I’m also looking for someone who will be there to help if it’s slow going and will still return calls promptly when the initial excitement wears off.

    Summary: Shared passion, morals/scruples, and loyalty.


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