On the same note, while many venture firms have evolved to the new startup world, some still party like it’s 1999.
In the 1990s and early 2000s, venture capital and venture investors were the scarce resource and entrepreneurs were perceived to be abundant. I remember how magical it felt to walk into Sand Hill Road offices back in 1998 and how opaque the financing process was.
Today, the situation is reversed. Money has become a plentiful commodity. Between seed funds, incubators, Angel List and progressive VC firms, founders have so much choice. In addition, with an endless amount of information online, fundraising has become very transparent. There is no mystery or wonder to venture capital anymore.
And every VC firm’s party line now speaks to this. They “celebrate” the entrepreneurs. They claim to be founder-friendly. They aren’t like other VC firms. They’re not sure who these “other VC firms” are.
But the reality is, there are a number of venture firms that are still on the high hog of management fees and haven’t accepted this new reality. Here’s how to avoid them.
1. They’re slow. This was the hallmark of the 1990s VC. Email was a black hole. They’d get back to you as soon as possible – here, possible was defined as being after drinks at the Rosewood, a round at Palo Alto Hills and dinner at French Laundry. These VCs are too busy and important to respond. The modern VC knows that good entrepreneurs have tons of choice so they drop everything to get a deal – just like you will rearrange your life to get a customer or launch a product.
2. Their life revolves around the “Monday Partner Meeting.” Thousand of years from now, archaeologists excavating Silicon Valley’s ruins will have a laugh at the mahogany-mantled conference rooms that were setup for the Monday “PMs.” Can you imagine a customer trying to buy from you and you saying, “we meet once a week on Mondays – can we talk then?” 1990s VC wants the world to revolve around his (unfortunately it was mostly “his”) schedule. Modern VC realizes the world will keep moving without her.
3. They multi-task in meetings with you. The Blackberry – and now the iPhone – was probably the worst enabler ever for the ADD 1990s VC. Your pitch isn’t nearly as important as the new Maserati model that’s coming out. 1990s VC thinks you only deserved part of his attention. Modern VC knows she needs to do everything she can to get part of yours.
4. They are off for August, December and February. I’m not sure how it happened but I think Sand Hill Road actually is part of Europe, based upon the amount of vacation they take. I think they literally have five different weeks that they call “Ski Week.” The 1990s VC thinks the deals will wait for him. Modern VC knows she needs to jump on opportunity when it’s there.
5. They are on Sand Hill Road and NOT a baller. Speaking of Sand Hill Road, it is home to some amazing VC firms. Sequoia Capital can make people crawl in through a doggy door and people will still want to work with them. In fact, some of these best firms, like Sequoia, are actually the ones that have adjusted to the times and work even harder. The problem is the past-their-prime 1990s firms with Sand Hill Road addresses. They think they are important solely because they have important neighbors. Modern VC may be on Sand Hill Road, but she’s as likely to be in San Francisco, Palo Alto or at your office. Modern VC goes where the deals are.
So if you see 1990s VC, tell him that just like Dharma and Greg isn’t on TV anymore, so he’d better adjust his style or you’re going to change the channel.
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