Smartest Girls In The Room
Tuesday, September 25th, 2012
by Sarah Hall, CEO of Harley & Co.
As we lead up to Social Media Week, we are looking forward to insightful discussions and know we are going to be learning a ton of somethings. We are so excited to be part of The Smartest Girls in the Room with a bunch of other amazing and successful women.
VC/startup relationships are incredibly complex and we want to give you a light look at some of the top-level dynamics and trends that we often see and tips and tricks for making them work. It’s a little something we call Investor Dating 101: How To Find “The One” And Making The Relationship Work.
For startups, you should approach your VC firm as you approach dating, carefully.
Finding the right investor can be like trying to find “the one” on a night out. Everything looks pretty and shiny but it’s hard to figure out if beneath all the glitter any of the prospective suitors is a potential life partner.
Maybe you won’t be with your investor forever, but by the end it will probably feel like you’ve lived together several lifetimes. That’s why finding a partner to support you, add value and stand by the relationship/baby (company) that you are growing together is a tall order.
Before you launch into the VC “dating” community, consider a few things:
1. Are you ready to be in a relationship? Maybe you “aren’t there yet”, aka you aren’t at the organizational or product development stage necessary for your prospective partner to appreciate the value that you bring to the table. There is nothing worse than being in a relationship with someone who doesn’t know your worth. Few things can kill romance or your visions for the future like a bad valuation.
2. What does your dream partner look like? Is he tall, dark with deep connections in the health or technology industry, or is she an athletic blonde with the right content producer contacts in Hollywood? Do you want a partner who wants tons of quality time with you or a long distance relationship? Figuring out your ideal type can help you target the search and your “ask” when looking for a VC.
3. Make sure that you are in it for the right reasons and not just because of the initial “attraction.” We’ve all had amazing first dates followed by second date duds. It’s important to have several meetings with potential investors in different settings to look at them from a variety of “fit perspectives”. Would you work well together on the organizational culture, the expertise or the relationships side? Dating/marrying for money can have some serious drawbacks once the glow of name-dropping and spontaneous industry trips fades. There are other value-adds that an investor can bring to create a relationship and company with a lot more value over the long term.
4. Are they marriage material? Now set some guidelines and general operating procedures. Remember why you got into the relationship in the first place. You could be in dynamic where your investor suddenly becomes your “adversary” and you forget why you ever married them in the first place. Investors, like any company, have things that they are amazing at and things they are not. Play to their strengths for advice, relationships and financial modeling/planning support. Don’t forget that you are mutually incentivized to make this relationship work and are both bringing important things to the table. Also, don’t be afraid (within certain contexts) to admit when you need support and hold your partner accountable for help. If you fail, they fail.
Sarah Hall (@harleyandco) is an expert in a variety of industries and currently the CEO of Harley & Co, a new “startup for startups” specializing in communications, branding, interactive marketing campaign design and digital strategy, among others. She brings a unique background of startup and VC-consulting expertise to the field, along with extensive work in social media, performance management and consulting for large-scale brands.