After all, most entrepreneurs understandably want as much control as they can get. Because most investors I know seek to be “entrepreneur friendly” and cultivate this reputation explicitly to gain access to the most competitive deals, it’s tempting to go along with this trend. In the past decade, entrepreneurs like Mark Zuckerberg of Facebook, Adam Neumann of WeWork, and Elizabeth Holmes of Theranos have helped popularize the notion of the unleashed startup led by an entrepreneur who retains extraordinary levels of control - with investors and board members relegated to passive roles. It is impossible to train a puppy without discipline, and businesses require discipline as well. Note that Doriot includes “dissuade” on his list of jobs that must be done. Along with support also come accountability and sometimes consequences. Especially at the earliest stages, startup businesses are fragile and need support. These roles don’t perform themselves, and VCs who invest passively may get lucky, but are not following Doriot’s value-creating principles. The venture investor must always be on call to advise, to persuade, to dissuade, to encourage, but always to help build.” There is a sales door to be opened, a credit line to be established, a new important employee to be found, or a business technique to be learned. “There is always a critical job to be done. Being a steward of the business is an active role, as explained by Georges Doriot, who is considered to be the “father of venture capital” by industry historians: That means adopting a stewardship mentality, assisting entrepreneurs with growing their businesses. Just to be clear, I believe that investments are like puppies, not entrepreneurs themselves! These deals present obligations requiring the equivalent of care and feeding, so they can grow up to be strong and healthy. It’s not any different for venture capital investments: someone needs to be responsible. Someone needs to collect the puppy’s “deposits” from your neighbor’s lawn. The puppy chooses your favorite shoes as a chew toy. The dog wakes up at 5:30am and needs to be walked. The kids are still kids, after all, and don’t quite pull their weight with puppy-related chores. The new puppy is adorable, but needs to be trained. Of course, the honeymoon period typically ends quickly. Parents are proud that the kids have promised to help take responsibility for the new member of the family. It’s a lot like bringing home a new puppy, which has apparently been a trendy thing to do during the Covid-19 pandemic. Making an investment is actually the start of the race, not the finish line. Generating a return by growing and exiting an investment is the tough part. Anyone can find a startup and write a check. In my opinion, this is because making an investment is the easiest part of the venture capital job. Not surprisingly, this investment firm is no longer in business. The firm would throw a lavish, self-congratulatory party for each new startup added to the portfolio. One organization with which I’m familiar started in the early 2000s and was known for celebrating each time it completed a new investment. Venture capital firms come in all shapes, sizes, and cultures.
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