The Amazing Disappearing VC

A number of VC firms have hired specialists in the area of recruiting.  Others have partners with expertise in PR.  Firms have networks of advisors, too--with particular expertise in your area. 

Interacting with a venture firm these days can feel like ordering from Seamless.  Pick what you want off the menu and someone will provide that service for you.

It's happening on their side, too.  Given the proliferation of accelerators and incubators that pre-vet entrepreneurs, roll up their sleeves to help companies, and dress them up for demo days, the best and brightest are being showcased to look better than ever.  Need an even more Seamless-like experience?  Drop by AngelList, where startups have been vetted by a community of advisors and other investors.  This somewhat mimics real life, where many investors won't take a meeting with you unless they come through their "trusted network". 

So, with all of these structures for vetting companies and all of these off the shelf programs for vetting companies, what does your average investor actually do these days?

I'm tempted to say "raise money". 

It's true, though.  Building the infrastructure of a firm with multiple partners, staff, and scaling up the amount of money you raise seems to be a fulltime job.  That's why I really don't want any of it.  I like spending as much time as possible directly with companies and talent and not having to worry about managing my firm.  One of my potential investors called me the "lean VC".  I sit in a co-working space, bike to work and to visit startups, and have no analysts.  A lot of the bells and whistles I'm seeing get built into the ecosystem just seem like a lot of "stuff".

I don't really like "stuff".  Never have.  I want as little "stuff" as possible.  Stuff is what makes you think you need a bigger apartment than you need.  I see a lot of firms trying to add on "stuff".  First Round does a great job of seamlessly integrating it into how they work as a firm, without it being a replacement for what you get from the partner on your deal.  With other firms, it seems a little bit like a bolt-on.

Call me old fashioned, but what happened to the days where the criteria for being a full time investor at a venture firm meant having an expertise in the functional areas of a company--some product, maybe some tech, PR, marketing, etc.?  When I've watched VCs like Fred and Josh talk to a company, there isn't a single topic that they couldn't at least offer some low hanging fruit on--because they've been working in and around startups for so long.

I'm not sure about recruiting partners.  Shouldn't investors themselves have networks of talent--since these are the same people that, theoretically, their dealflow is coming out of?  I mean, if you don't know any developers, how you are meeting them when they build something that you can fund?  Are you waiting for them to pitch you?

Perhaps the better approach would be teaching the startups how to recruit for themselves.  Otherwise, you're just taking the same outsourced recruiter model with it's scaling limitations and moving it in house.

I suppose it doesn't really matter much when it seems like most of the money that wants to invest in startups when they need it most--in a seed round--doesn't really want to be that active.  You're seeing more and more of these "party rounds" where everyone tosses in a little, but few people have the incentive to focus that much on the company, hold their feet to the fire, or roll up sleeves. 

Doesn't anyone do any work around here?  Hello? Hello?  Anyone?

In the early stage, companies need as much help as they need money.  They don't always need a world renowned expert, either.  They just need to be functional enough to be dangerous--to not horrifyingly fail in major aspects of running the company in the first year.  Reading their needs and responding quickly with some firsthand experience and timely, appropriate advice--that's a fulltime job. 

Having a knowledgeable investor who knows a little about a lot of things with enough time to focus on you in a round is going to help the company tremendously.  If you don't have that to start with, then no amount of bells and whistles offered to you by an investor is going to work out.

When you offer a menu of services, then someone's going to have to fund the construction of that restaurant, and you can expect that fundraising to scale the venture firm is taking up just as much time for your investor as it is for you to scale your company.