4 things startups should judge VC firms on
Last month we looked at what turns investors off of biotech startups. But what about venture capital firms? When it comes to healthcare investing, what signs should alert startups, or for that matter the members of a VC firm, that the firm is stuck in a time warp?
The old-fashioned attitude has been one of venture capitalists as the center of entrepreneurs' universe. But a culture change coupled with competition from the likes of super angels, accelerators and AngelsList, mean venture firms can no longer afford to be passive.
Some venture firms are way overdue for an update, according to Nick Mehta — a former entrepreneur-in-residence at Accel Capital and a PE Hub contributor. He collected some telltale signs that a venture firm's culture is well past its sell-by date. Here are four of them.
Slow response time: Venture capitalists need to have a timely response to entrepreneurs if they're interested in them. Good companies won't wait around for them anymore. That means no delaying email responses and faster pace of making decisions than the weekly partner meeting. "[The] 1990s VC wants the world to revolve around his (unfortunately it was mostly "his”) schedule. Modern VC realizes the world will keep moving without her.”
Multitask in meetings with entrepreneurs: Venture firms can't afford to divide their attention when they're meeting with startups. It's not professional and it will turn off potentially great investments.
Frequently on vacation: If venture capitalists are off for a month at a time it's not good. "The 1990s VC thinks the deals will wait for him. Modern VC knows she needs to jump on opportunity when it's there.”
Anchored to Sand Hill Road: There's some debate about location. Although Mehta takes the view that investors will go where the deal is, I frequently hear that it helps a lot to be close to investment hubs like the Silicon Valley or Boston, New York or Philadelphia for that matter. Angel networks and super angels are shaking things up. But the days where a VC needed to be on Sand Hill Road as some sort of status symbol are gone.
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