My 4 year anniversary at Redpoint is fast approaching. Over the course of four years, I have had the privilege to meet in some form 3,000 companies. I’ve diligenced roughly 100 of those and Redpoint has invested in perhaps 20. I’ve worked with twelve investments as a board observer. I’ve been reflecting on what I would expect from an investor as an entrepreneur.
During the pitching and diligence
- Timely communication and quick decisions. Honest, transparent and rational decision making.
- Insightful or curious questions that demonstrate an understanding of the business or a desire to learn more about it.
- Strong desire to get to work understanding the market through research, modeling and/or diligence calls.
- Willingness to work his/her network to get insight that can be shared with the founder.
- Eagerness to learn about the founding team: their journeys, their passion and goals.
During term sheet negotiation
- Expression of a common long term vision and the path to achieve it.
- Similar exit goals. This is driven by fund size among other factors.
- Fair terms and rationales for the key ones: board structure, option pool, founder vesting.
- Access to every founder the VC has worked with in the past.
As a board member
- Passion for the business to help recruit, build the brand, raise more money, and speak to the press.
- Willingness to work build his/her network to drive the business forward.
- Honesty and straightforwardness. Civility and respect for other members of the board and team.
- Decision making auditor. Someone willing to challenge the CEO.
- A great listener and someone who asks questions before making recommendations. See Why Smart Executives Fail.
- Openness for learning new models and ways of doing things. Willing to be wrong.
- Patience. Long term vision and the stomach to bear ups and downs, inevitable in any company.
These are the principles I hope to live up to as an investor. They are the ones I would demand from my investor if I were a founder.
What are the characteristics that are most important to you?