A White Paper for VC Boards

March 5th, 2007 • Entrepreneurship + Startups, Venture Capital

As an entrepreneur, I’ve often heard the VC mantra of “we’re value add investors“. Most entrepreneurs quickly realize that most VCs aren’t value add. If they aren’t adding value, you hope that they’re at least value neutral but in reality most are value subtracting to your business. The benefit of their investment sometimes reduces the impact of this reality.

So how do you figure out who is really “value add” versus “value subtract”? One way is to see how the VC acts when no one is watching. Scott Burkett made mention of three local VCs who didn’t even care to hear pitches by some local startups at a recent TAG event. No, I don’t know who these VCs are and in all honesty, I was hanging around outside for a while because I was annoyed that the event was so far behind schedule and I got tired of sitting in my chair. Most of my BigThinkr colleagues had the same thought so we were all milling about outside.

Another way to identify “good” VCs is to see how they are supporting the greater entrepreneurial community. Levensohn Venture Partners has spearheaded the collective writing of three (so far) white papers which discuss various aspects of venture capital funded startups. I recommend reading their latest paper entitled “A Simple Guide to The Basic Responsibilities of VC-Backed Company Directors“.

I’ve never had any dealings with anyone from Levensohn Venture Partners but they seem to care about improving the greater startup community. Although they may not derive direct benefits from this activity (read: profits), I’m sure there are some long term intangible benefits that they’ll receive (read: good vibes from folks like me). Too bad more VCs (heck, more individuals in general) don’t view their relationships and interactions with others along the same lines.

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