Why I Am Ashamed Of My Early VC Years

business meeting

I recently ran into an entrepreneur on whose board I sat during my venture capital years. We awkwardly shook hands and then quickly slipped into a conversation that seemed to pick back up on the last one we had years ago.

Back when I was the VC and he was the entrepreneur, we had been on opposite sides of a tense situation. I thought he should sell his company and he thought I should pound sand. Talking to him recently I realized just how much I've grown. I could talk with him with a new empathy—one I'm ashamed to say, I did not have as a VC.

I worked in VC for almost six years before founding and running my own technology company. My days at a venture firm were filled with pitches from entrepreneurs looking for financing. I really enjoyed getting to meet entrepreneurs. I would saunter into meetings with them just as cool as could be. After all, I was in the power seat. Then I'd get to work analyzing their businesses.

I knew a lot about markets and industries from interviewing people, analyzing companies and doing research, but at that point I had never run a company before. As I've learned all too well, it's one thing to analyze companies and quite another to start and run one.

To be sure analysis and critical thinking are a necessary component of investing, but a simple and sincere acknowledgement of an entrepreneur and where they are coming from can turn a presentation into a conversation—one that an entrepreneur will not forget.

I learned that firsthand when at one VC firm I went with a partner to visit an entrepreneur that had presented to the firm years before. My firm had refused to fund him, said all the niceties that are standard in VC talk (e.g., all the saying no without saying no business) and sent him on his way. We were back to see if we could get in on the monster round his company was then raising.

The entrepreneur invited us in, offered us something to drink, sat by himself across the table and told us exactly why we would not be allowed to invest in the round: because we had shown him zero empathy.

I remember looking at the stunned face of the partner. He had forgotten one of the laws of the universe that I was just learning—at some point, the seller becomes the buyer.

Still, it took the experience of raising money for Consorte Media for me to truly understand what that entrepreneur must have felt. In my own process I encountered all sorts of absurdity, from comments like "I don't believe in your market" (um, why then did you take the meeting?) to excessive "diligence" requests coupled with disturbing avoidant behavior. I also found incredibly insightful people whose belief in me made all the difference.

It's not easy to navigate the financing world and its people. That's why I'm grateful for my time on both sides of the table. It gives me the perspective to realize what many lose sight of. With power comes responsibility and in the small, competitive world that is Silicon Valley, empathy counts.

Read more about Getting Funded

You can find Alicia at www.aliciamorga.com and follow her @AliciaMorga.

[Image: Flickr user thinkpanama]

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6 Comments

  • Donald Spero

    Well said! I was a technology entrepreneur for 21 years and have been a VC for the past 7 . Both as a CEO and as a co-investor/board member with other VCs, I've had my share of encounters with the misdirected arrogance of VCs who have never started or run anything and have little concept of empathy or humility. The good news is the growing number of VCs with experience on both sides of the table and the increasing openness of their colleagues to striking a better balance on these issues.

    Donald Spero
    www.newmarketsvp.com

  • Peter Hans Frohwein

    Thank you !   You article should be required reading in ALL business schools.  Life is about how we treat people, not about how many green pieces of paper we can collect.  

  • denny k miu

    it's better late than never. check out chapter four of my recently published ebook on my own experience as an entrepreneur with vc's (free download for a limited time).  hope you like and good luck with you going forward.http://buzz.dennykmiu.com/ebook

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