RK on the VC-entrepreneur relationship
I don’t think many people follow my comments thread, so here is a comment from Robin Klein worthy of a post:. You can read Robin at http://the-accelerator.blogspot.com/
I’m not a VC nor am I an Entrepreneur. On second thoughts I am both.
Well positioned to join the debate.
On the one hand: Some entrepreneurs don’t help themselves in their approaches to VCs. Some don’t have a clear idea of the potential for their product/service. Some don’t know who their competitors are? Some simply don’t think big enough and have very limited ambitions. Some have done little or no research on the VC firm or the individual they are approaching.
Do they have the right to expect or demand that VCs give time and effort for half baked, poorly researched or developed plans?
The high rate of failure of start-up businesses means that VCs need to be very selective and need to make difficult judgements about the probability of success.
I also do have a gripe about entrepreneurs who focus entirely on dilution and price without giving proper thought to the total package of support that they should be demanding from their financial backers.
On the other hand: Some VCs don’t respond clearly or quickly enough. Entrepreneurs really do need to know where they stand. When turning down an investment opportunity, VCs would do well to add some value by being as clear as possible about why that decision has been made. Some quite simply can’t – or don’t – give sufficient time to evaluate the opportunities presented. Some don’t accord the required respect nor demonstrate understanding of how much blood, sweat and tears has gone into the preparation of a presentation or business plan.
What we (Saul and I, Sam and others) are trying to do is to help increase the interaction between VCs and Entrepreneurs and to encourage exchange of ideas which leads to better understanding. Great companies can be (and are being) built in Europe but in comparing our ecosystem with that of the valley, it does need to be recognised that the US is still the largest homogeneous market on the planet and cracking that market is a necessary requirement for building a global, word-beating company.