Follow me @samirkaji for my frequent, and sometimes relevant insights into the world of VC and tech.
Every week, our team receives at least 15–20 emails from entrepreneurs that raising a seed or Series A round for their companies.
While some simply reach out to solicit general advice, the vast majority are mainly interested in getting introduced to a specified list of investors. When an entrepreneur has put in the appropriate work to qualify fit (and where we agree), we’ll happily make the connection assuming that the investor opts-in to the introduction.
First, broadly speaking, I strongly encourage entrepreneurs diligence potential lead investors as strictly as potential investors conduct diligence on them.
A great lead investor-entrepreneur relationship is comparable to a healthy marriage, where both sides challenge each other to become better, are able to engage in blunt conversations borne out of trust, and can be appropriately supportive through both thick and thin.
And while I doubt anyone would debate the importance of compatibility as it relates to the investor and CEO relationship, I’ve recently observed a trend where too many entrepreneurs have relaxed investor diligence discipline for “celebrity” investors.
A couple of brief editorial comments first:
– When I use the term celebrity investor, I’m not referring to mainstream celebrities such as Ashton Kutcher or Carmelo Anthony that happen to actively invest in technology start-ups (frankly, their brand equity value alone usually justifies the modest check sizes they put in).
– I’m also not referring to investors that have become industry celebrities as a function of extremely long and successful track records (i.e. Bill Gurley, Mike Moritz, John Doerr, Vinod Khosla, Peter Thiel, Fred Wilson).
Instead, I’m referring to investors that have become influential personas in industry circles largely as a function of personality, social media presence, or through some other measure unrelated solely to their talent as an investor and company builder.
When I started within the industry 16 years ago, there were only a handful of investors that had built notable personal brands. Times have certainly changed. The ubiquitous media coverage of technology coupled with the enormity and depth of social media reach has granted individual investors a platform of quickly creating personal brands with astonishing reach.
As an example, let’s examine the reach and activity the following venture investors have:
Twitter followers by investor
The 6 VC’s above have nearly 700,000 followers (mainly industry types), and have sent nearly 250,000 Tweets! Add in active presences on blogs and speaking engagements, and it’s no wonder they have become household names in entrepreneurial circles.
What is fascinating is that everyone in the group above has been an institutional investor for less time than a typical closed-ended venture fund. I’d be willing to bet that the investors above would openly admit that they cannot yet be minted as wildly successful institutional investors (at least from a returns standpoint); it’s just too early to tell given the venture cycle.
Also, let’s acknowledge that an investor can be an incredible partner to an entrepreneur while not yet be considered successful by LP’s due to lack of overall returns (although the two usually tend to intersect over the long term).
Let me first make one thing clear. The inspiration for this piece is not to steer entrepreneurs away from “celebrity” investors.
In fact, most of these types (including the guys above) have been incredibly successfully in their careers, and more often than not are insanely talented at helping entrepreneurs build great companies. But returns aside, the reason the guys above are good investment partners is primarily a function of what they do privately to help entrepreneurs. In fact, just last week I heard incredibly glowing endorsements from founders who are working with investors Hunter Walk and Jason Lemkin,
And I know that there are legions of founders that passionately endorse Mark, Jason (Calcanis), Semil, and Tomas as being critical drivers of the growth of their business.
That said, I feel compelled to send the follow message to entrepreneurs:
Keep consistent with the diligence you do on every investor, regardless of public brand equity. There is no evidence that suggests correlation between social media influence and company building acumen.
Ultimately, you may discover that a well-known investor is the best fit for you and your company, but that conclusion should come as a result of running an objective and balanced analysis of professional/personal/business fit.
Ignoring the flaws of a supermodel through confirmation bias may mean missing that perfect boy or girl next door who’s right under your nose.