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Jon Bradshaw and Peter Harris

In this episode of the Venture Capital podcast, Jon Bradshaw and Peter Harris discuss the intricacies of interacting with venture capitalists (VCs) from the perspective of entrepreneurs. The conversation is sparked by a story shared by Peter about an entrepreneur who felt dismissed by a VC during a meeting. The entrepreneur, who was running a successful service business at a scaling point, sought advice but received little attention or insight from the VC, leaving him frustrated.

Is My Business Made for Venture Capital?

In this episode of the Venture Capital podcastJon Bradshaw and Peter Harris discuss the intricacies of interacting with venture capitalists (VCs) from the perspective of entrepreneurs.

The conversation is sparked by a story shared by Peter about an entrepreneur who felt dismissed by a VC during a meeting. The entrepreneur, who was running a successful service business at a scaling point, sought advice but received little attention or insight from the VC, leaving him frustrated.


Key Points Discussed:

  1. VCs and Time Management: VCs are time-constrained and prioritize deals they are actively chasing. If a VC is not pursuing an entrepreneur, it often indicates a lack of interest.
  2. Building Relationships with VCs: The importance of adding value to a relationship with a VC is emphasized. Entrepreneurs should focus on assisting VCs rather than directly seeking help or pitching ideas.
  3. Realistic Expectations: Entrepreneurs should understand that VCs might not always provide the desired advice or support, especially if the business isn’t investable or doesn’t align with the VC’s interests.
  4. The Role of VCs: VCs are seen as more beneficial in fundraising efforts rather than operational or sales advice. Their strength lies in pattern recognition and networking rather than in-depth operational expertise.
  5. Founder-VC Dynamics: The conversation also touches on the complexities of the relationship between founders and VCs, highlighting that it can be adversarial or supportive, depending on various factors.
  6. Advice for Entrepreneurs: Founders are advised to approach VCs with a mindset of offering value, understanding their limited time, and being prepared for potentially harsh or unfiltered feedback.
  7. Entrepreneurial Challenges: The episode concludes with a discussion on the challenges entrepreneurs face, including the difficulty of receiving honest feedback and managing expectations in interactions with VCs.

Please share your experiences with VCs and to tune in for future episodes for more insights on venture capital and entrepreneurship.

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Episode Transcript

Jon: All right. So you've got a story you want to share. This week, we had the Silicon Slopes summit, and Peter and I heard lots of founder stories. Yeah. So I think Peter wants to share a founder story, so.
 
Peter: All right. So I had this entrepreneur come to me and he was like, Hey, can I ask you a question? And I was like, Yeah, that'd be great. So you could teach. So he's like, okay, so I have this company is doing really well. It's starting to scale, but I'm at this like inflection point and, you know, I'm trying to figure out, like, what do I do?
 
Peter: I've never been to this point before where like, I think this thing could scale and get really big and take off and like, what are the things I should be thinking? What are the things I should be thinking about? Like, how should I go about it? Like all of those things. And so is like, so I decided like, I'm going to go talk to this venture investor who's invested in a bunch of companies that have scaled and gotten really big and done really well.
 
Peter: And like in his mind, he was like, I'm going to pop into this office and I'd ask this see, like lay out my situation assets we see for advice, and I'm going to get all this great insight on what I should do and instead he gets in there for the meeting and within like 10 minutes the VC is like, Well, that's great.
 
Peter: It was nice meeting you, handsome. Like some swag from the venture firm and kindly shows him to the door and he was like, pissed.
 
Jon: Was he upset?
 
Peter: He was pissed. Yeah, he was really upset. He was upset because he's like, well, I like, took like, a meaningful amount of time out of my schedule to come meet with this CVC and like, we had booked, like it was like half an hour, an hour or something. I don't know what And I had these, like, really important questions and he just like, totally blew me off and he was like, he's like, like this company, like, I don't need money for this company, but like, my next company I might and I'm never going to that VC again like he was.
 
Peter: He was ticked. And so he was like, he was like, All right, so here's my question. It's like, why? Why wouldn't the VC give me the time of day? And what do you think.
 
Jon: It's a service business or the current one or the next one?
 
Peter: The current one? It's a services business. Yeah. Yeah.
 
Jon: I think it's.
 
Peter: Like an agency.
 
Jon: Yeah. I think VCs are very time constrained. I think their limited resource is everyone wants to spend time with them. Yeah, but the deals they want to spend time with, they have to chase.
 
Peter: Yeah.
 
Jon: So if they're not chasing you, there's just, there's no, there's no interest. Yeah. They don't want to hear hypothetical.
 
Peter: Yeah.
 
Jon: If you want to build a relationship with a VC, find ways to help them. Yeah. Don't waste their time.
 
Peter: Yeah, I think that's right. I think that's.
 
Jon: Right. Never go for the ask. When I'm working with VCs, it's always, Hey, how can I help you? What can we do? By the way, here are the assets I have that you might be able to leverage. Yeah. Never. I never. I never pitched anything.
 
Peter: Yeah, I think. I think that's a good that's good perspective. yeah, my thought process was similar to, to me though, is kind of like the VC met with them and then was like, this is not a company I would invest in. So yeah, like not worth my time and just kind of ended things, right? Is like, it's a services business.
 
Peter: He just clearly he just made it clear that like he's not raising money.
 
Jon: So this is make up their mind in like 3 minutes or less.
 
Peter: Yeah. I mean, it's like dating, right? It's like you get in that day and, you know, within a few like within like 30 seconds, if it's going to be interesting or not, VCs are not too dissimilar, right? Whether that's fair or not, I don't know. But I don't know that that's my read on it. I guess the question is like, so I really like your thought, which is if you want to build a relationship with a VC, you think like, how can I add value to this relationship?
 
Peter: the ways you primarily add value are like, Hey, let me introduce you to some interesting deals with good traction. I think that's a good way connecting them to people that could invest in their fund is a really good way.
 
Jon: Most people don't have those points though.
 
Peter: Yeah, well.
 
Jon: Those are I mean, look at how many stuff. Look how many deals I've introduced you to.
 
Peter: Yeah, a few.
 
Jon: Probably sub ten.
 
Peter: Yeah.
 
Jon: And I've known you for ten years, so that's like an intro a year.
 
Peter: I know it's hard to add value to VCs, right? I get that. I get that. but you're, you also likes and quality stuff, right? You see a lot of crap that you filter out that doesn't make it to me, which means by default that like when you do send something to me, I take the intro because I know you're not going to waste my time right?
 
Peter: So yeah, but I don't think you have to send like a zillion deals over.
 
Jon: Yeah.
 
Peter: And look again, this is like the hard thing about hard things is that they're hard. And if you really want to stand out, you've got to do stuff that other people aren't willing to do, which means it's probably going to be something hard right? So anyways, I mean, other ways that you can help VCs, you can help like build their brand.
 
Jon: Which is what this founder could or should have done. Yeah. In the media I think you're talking about.
 
Peter: Yeah, because he has a ton of experience in that space, right? I mean, actually, so he and I spoke a lot about certain things related to that that were like super helpful. And I'm going to follow up with some more questions like, yeah, that could have been an interesting way in which he could have, like built more of a relationship and then potentially gotten more out of it.
 
Peter: But yeah, I mean, I think I think part of it is just like, yeah, to your earlier point, like VCs are busy and their time is valuable and, you know, if they can't invest in your company, then they're going to kind of move on to the next thing.
 
Jon: So and so the purpose of the story is if a VC passes, don't get upset.
 
Peter: Well, I mean, I think that's maybe part of it. I think the other part is that, well, okay, so here's the other thing. And I told him this, too, is like I was like, look, the VC probably doesn't even know how to help you scale your business honestly. And so you went to him and you were like hoping he would give you all this advice, but you didn't give him anything, right?
 
Peter: You didn't give him your company wasn't investable, you weren't raising money. So like, you weren't giving him that. So that's out the window. And then you were asking for something that, frankly, he didn't know how to give. Right. Because even if the VC has built and scaled a business. Right. It was probably like more than a decade ago.
 
Peter: And, you know, some of the things are relevant but relevant, but not all of them. And so like, how much help is he really going to be? And it was probably in an area that was totally different than what you're going to raise. And. Right. You know that you're scaling your business and so just not super helpful. And so like the VCs is kind of this awkward situation is like, I don't have anything to give you and you're, you know, I can't give you money because you don't need it.
 
Peter: And I can't give you advice because I don't frankly have it. So like.
 
Jon: Tell me my baby's beautiful.
 
Peter: Here's a piece of swag. Thank you for coming. Yeah.
 
Jon: It's not an ugly baby. He doesn't even have the baby.
 
Peter: The irony, though, is that this VC probably thought they're helping. They're helping. And he was like, Yeah, toys. They salvaged that relationship because I gave them, you know, like a baseball cap or whatever it was, right? And in reality, the entrepreneur is just, like, ticked.
 
Jon: But most entrepreneurs are.
 
Peter: Yeah, that's true.
 
Jon: Like, I mean.
 
Peter: I know VC is going to be like, well, honestly, I don't know how to help you with scaling your business, right? They're not going to be honest about that because there's like so much ego there. So they're just, you know, they're going to dance around it and send them on their way. What are you going to say?
 
Jon: I mean, I, I think I think you nailed it. So I also just had a brain fart, which has happened.
 
Peter: Yeah.
 
Jon: Yeah. I think the thing is that when I when I was working with the, you know, with a bunch of angel investors and because of this podcast, most founders, when they come to VCs, are asking, they ask a question. But it's really, how do I raise money? Yeah. And they want to know how to get there. And that's really hard because you can't I mean, the the honest answers they don't really want to hear.
 
Jon: Right. That's the other part. I don't think some of the these some of the investors in Utah, they think of the worst names are the ones that are on a reputation. Yeah, the worst reputations. Yeah. The common denominator is they tell them unfiltered feedback. Yeah. And the founders can't handle it. And I think they need to be more mature in those scenarios.
 
Peter: I mean, who needs to be immature that.
 
Jon: Aren't a founder?
 
Peter: Yeah.
 
Jon: I mean, here you've got someone who's seen.
 
Peter: I know, but. But look, it's so hard, right? So I just because, like, it's like you put your blood, sweat and tears into this thing and then that somebody like who doesn't really understand it tells you that it's ugly.
 
Jon: Yeah. So I don't give advice. I just say, Hey, let me think about it. Maybe I can make some intros.
 
Peter: And then you go some.
 
Jon: I don't go.
 
Peter: So kidding. I'm kidding. I'm kidding.
 
Jon: There's very few. Do I sit down? But it's like you're your student again. Live from your birthday party. Yeah, They're arguing with them. There's no way your advisor deserves 50% of the company when they haven't even put in a single dollar. Yeah, and they've been to one or two meetings.
 
Peter: Yeah.
 
Jon: They deserve nothing.
 
Peter: Nothing.
 
Jon: They're not paying you anything else they're doing with you should be on the side in a separate deal every deal, the merits for equity should be a 1 to 1 ratio and stand on their own.
 
Peter: Yeah, and unfortunately, the reality in that situation is that like. Like that, that that business is dead on arrival. It's not going to go anywhere.
 
Jon: And it's a and it's an old meeting model. Yeah, well, but that's a separate thing.
 
Peter: That's a separate thing. Anyways, back to back to this, this founder and story.
 
Jon: So. AVC Be careful how you use their time.
 
Peter: Yeah, but I don't even know about that. I think it's just like, so there's a saying that if you want to raise money, ask for advice, and if you want advice, ask for money. And I think that holds true to a certain extent with VCs.
 
Jon: Does it.
 
Peter: Like if he really want to, like.
 
Jon: All the VCs in the backchannel joke about that phrase.
 
Peter: Why.
 
Jon: When, like, whenever there's, like a new, like, intern or analyst and they're like, they said they don't want money and I'm not going to want to fund. I was. But the partners like that means they want money.
 
Peter: Yeah, but that's my point, right?
 
Peter: But okay, so if you go in there and you're like, Hey, I need advice. Here's how my company is crushing it. Right. Then VCs will get FOMO. Right. But if you go into them, like, we need cash because we're about to run out, right, then VCs like, I don't want to. I don't want to save this one.
 
Peter: You know what I mean? Like, it's not my job. So. But I guess in this situation, right, for the founder, like, if he had gone in and been like, I'm thinking about raising money for this company, let me give you all the stats, blah, blah, blah.
 
Jon: Is it fundable? Things like.
 
Peter: That? Yeah. Then he would have gotten advice that maybe would have more been more helpful along the lines of what he was actually trying to get. But maybe not because like I said earlier, maybe the VC doesn't doesn't have any like actionable advice on how to scale business. So if you're going to go ask a VC for advice, I guess here's the other thing.
 
Peter: Like know what things VCs can give you advice on that was actually good and actionable.
 
Jon: Let's go to the deeper question was what business operational sales advice do you respect? What percentage generally?
 
Peter: What do you mean?
 
Jon: Like like when you hear VCs mentor founders? Yeah. How much of the time are you like that is like dead on and that's just the VC just blabbing.
 
Peter: I think most of the time it's a VC blabbing. Here's the way I think about providing that advice to my founders. What I will say is I'm looking across my portfolio of companies that are similar to yours, and this is like what I'm seeing that they are doing or not doing and the impact it is having. Take that for what you will.
 
Peter: Your business is different, right? But if that is helpful in any way, that is what I am seeing. Okay. But I never go to a founder and be like, You should do this. I may come up with like brainstorming ideas and be like, Hey, what about this? What about this? What do you think of this? But then I always followed up with like, there is no pressure for me to do any of these things.
 
Peter: Hey, these are just like, fun, spitballing, brainstorming ideas, right? And usually good founders have already thought of, like, most of those ideas already. Anyways, so.
 
Jon: as I've been on both sides of the aisle, yeah, I feel like most individuals in general, Yeah, we get a very specific silo of experience that they that they're dealing with. Yeah. And most VCs get really good. Their job day in and day out is pattern recognition for what will be the next company. Yep. And they become very disconnected from the operational sales components that make up is successful.
 
Jon: Yep. And therefore it's easy to become even if a VC had a lot of operational experience 1 to 3 years down the line, I feel like their operational experience becomes less and less beneficial to being in the trenches. Yeah.
 
Peter: I agree. I think most VCs don't don't have particularly helpful advice to give.
 
Jon: Like if you're looking for help with your comp plans, talk to someone who's actually putting comp plans together. What are the current tracks?
 
Peter: Here is where VCs do add a lot of value or can add a lot of value If you are fundraising. That is where you should listen to your VCs. And I think that's one of the areas where entrepreneurs listen to their VCs the least. Right. They're happy to take advice on like sales and marketing plans or whatever.
 
Peter: Right. But when it comes down to like, the VC telling them, like, I think your valuation is too high, or these metrics are not going to get you the valuation you want or you're going to have a hard time raising. I think especially in the last few years, a lot of entrepreneurs have been like, Now, you know, I know better than you do.
 
Peter: I'm going to go out and be able to raise this.
 
Jon: What does Peter know?
 
Peter: What does petered out prove them wrong? And it's like, okay, you're taking the one thing that the VC actually could add value on because they're doing lots and lots of deals on a regular basis and you are not and you're telling them that their advice doesn't matter.
 
Peter: So I don't know. I think that is the one area where VCs can add a ton of value from like guiding and mentoring entrepreneurs. And then I think, frankly, the other part I think the other area where VCs can add a lot of value is networks. Well, I think networks for sure, making introductions. But what I was going to say is just being there to support the founder.
 
Peter: Right. Because the journey sucks. It's got like, some amazing highs and some incredible people.
 
Jon: What what founder is going to cry on the shoulder? AVC None.
 
Peter: actually, a lot of founders do.
 
Jon: The ones that are raised are like, I lost your money.
 
Peter: Well, look, the journey is got a lot of ups and downs and founders that trust their VCs. Yeah, well.
 
Jon: Yeah, that's a people do show.
 
Peter: And come talk to them.
 
Jon: I would never crown my VC shoulder. Wow. I've cut your shoulder, though. Not a VC.
 
Peter: Shoulder, but I am a VC.
 
Jon: But you're a friend first and foremost.
 
Peter: You. Yeah, I think. I mean, I don't. I wouldn't go so far as saying like, VC should be friends, but I think some of the VCs that I respect the most have these incredibly deep relationships with the founders they've backed and sometimes they are like the shoulder they cry on or the therapist you know, they listen to at two in the morning when you know, everything's going nuts and they're not sure what's going to happen next.
 
Peter: And they just lost a customer or like, whatever it is, right? I think that. So what you brought up is like an unfortunate thing that a lot of founders think, which is, like, their relationship with the VC is still adversarial. And I think most VCs think that, like, once they've written the check, they're now on the same side of the table as the entrepreneur and they want to be more in, but it's left.
 
Jon: But those are the ones that just do one check and not do follow on rounds.
 
Peter: But even if they do follow on rounds, right?
 
Jon: Yeah.
 
Peter: Like, like here's the thing. As, as a VC, I it's a lot easier for me to be helpful when I'm given enough time and I'm included in the conversation. Then when it's like, crap, we're going to go out of business tomorrow, right? And we need your support, right? And it's like, Well, is like, how come you didn't like, reach out earlier when these were like, actually solvable problems, Right?
 
Peter: And I could have, like, open up my Rolodex to help you find the connections you need or the funding or whatever it is. And now I just feel like kind of screwed, right? That's not a good way to build trust. So anyways.
 
Jon: For sure.
 
Peter: I'm just saying like VCs can be and you know, another area in which they can add value I think is being like the entrepreneur's cheerleader got support through thick and thin.
 
Jon: Okay.
 
Peter: Not all VCs do and not all VCs do it all the time with every company. But I do think it's an area where they can be supportive. If I dig it. You disagree? That's okay.
 
Jon: No, I don't disagree. I think it's a case by case scenario for sure. And I think it's it's amazing when those founders NBC's can mesh on that level and have that level of transparency and respect like you would a standard business partner.
 
Peter: Right. Right. You're right. That is my case. I'm saying is that's an area where he can add value.
 
Jon: All right. So it all sounds good. Let's thanks for the this episode. Thanks for the feedback on where VCs can and can't get add value and what to expect when you pitch them or don't teach them or how to approach them and how they might be responding or not. Go to venture capital firm for everything I just said, like subscribe, leave thoughts in the comments.
 
Jon: What are some of the positive or negative experiences you've had pitching to investors.
 
Peter: And has a VC ever given you advice? That was actually helpful?
 
Jon: Of course, for sure, but you have to understand where are the bounds? So anyways, thank you guys and join us for the next episode piece.