The Rainy Day Fund of Reputation

One aspect of venture capital that rarely gets talked about is competition to get into a deal.  

What happens when a founder has that rare wealth of riches when they're choosing who they're going to allow onto their cap table?  The tables turn and the one being pitched to becomes the one pitching.  

The moment when you find out that you're not guaranteed a slot is my least favorite as a VC.  I've seen different investors react to it differently.  Some are really competitive.  They want to "win" a deal--by beating out others.  

Personally, I don't like being left out of the chance to work with really great people on big problems worth solving.  I love this job so much and like seeing other people succeed that I have serious FOMO not to hear those stories firsthand and be able to make those hiring intros, pitch a reporter, or ask the right question at the right time in a board meeting.  When it all works out, it's amazing--and when it doesn't, it's really tough, but challenging in the best of ways.  

At the end of the day, however, a VC's money is just as green as the next one--which is where your reputation comes in.  There's nothing I can say or do at the moment of offering to invest that is more convincing than the sum total of what not only the fifty plus founders I've worked with beforehand have to say about me, but the countless others I've run into as an investor.  I take 150+ pitch meetings a year, and probably do a speaking thing every other week if not more.  

That's why it blows my mind when VCs are standoffish or disrespectful, or even worse, dishonest.  The reputation you create off of each 1:1 interaction with a founder is like a rainy day fund.  Every time you truly help someone, even if you don't back them, is a small deposit.  It's a founder being willing to say something nice about their dealings with you or to recommend you to a friend.

Helping every founder is an impossibility.  Sometimes, you just can't stick around one more minute at an event.  You've got friends or family waiting--and sometimes, you just need to put the e-mail down.  You can't get to that one founder that keeps pushing themselves back up to the top of your inbox, because you have four term sheets out and you're trying to help someone close a round, and someone else hire a COO.  You can't get to everyone, but you can respect everyone you did get to--and act like you know that as hard as you're working, they're working even harder.

Every time you slip an obnoxious term into a cap table, or take six positive meetings before ultimately passing for a reason that should have come out in meaning one, you're debiting your rep.  That's going to come back.  Maybe someone might actually ding you, but you're not going to have a founder go out of their way to recommend you either.  

Founders are making incredibly important decisions when they decide what investors to take.  They're literally stuck with this group for the duration of their company--and there is going to be no one they'll trust more for a recommendation than another founder.

So, as you're building your career, treat every founder as if they're going to talk to that one founder whose company is 3x oversubscribed--the one you think could make your career if only you got a shot to participate.