“Being a successful VC boils down to the ability to make good investment, which comes from good judgment. Good judgment comes from experience and this comes after making bad investments.”
VCs come from different backgrounds, some have operating experience, while others have investment banking and / or a MBA. Just like there is no secret recipe for success, there is no set template on what makes a good VC. However, here are a few things to look for…
1. Vision
VCs like to invest in businesses that are globally scalable. An Entrepreneur might have a great idea but a VC will give him/er the vision to take the product to market, which requires a VC to be a dynamic thinker with business acumen and great conviction.
2. Mutual Trust and Respect
Venture Capital is a long term game and in order for you to survive the challenges that come along the way, there needs to be mutual trust and respect between VC and the Entrepreneur. It is said that opposites attract, find a VC that balances the scale when it comes to achieving common goals of progress for all parties involved.
3. Personality Traits
A relationship between a VC and a Company is parental, so make sure that the VC you pick is patient yet persistent. S/he is creative and a problem solver and also inspiring / motivating at the same time.
4. Resourceful
It is important that your VC has a network you can leverage while you embark on your journey towards growth, but more important to check if the VC is willing to invest the time and attention needed for your startup to succeed. One way to measure this is how many board seats does the VC hold, will they have enough time on their agenda to provide you the guidance needed for your startup.
5. Emotional Regulation
Being a VC is a tough job, which often makes a VC come across as cold hearted. However, the best VCs have emotional connections as well as positive relationships with their portfolio companies. They don’t let this affect their decision making when it comes to crunch time. The hardest part of being a VC is deciding whether to let your underperforming companies die gracefully, die-hard, or to put in the effort to help find a safe home for the company. Being too quick to let companies die leads to underperformance as a VC, but investing good money after bad can also quickly lead to little or no return. How you manage your follow-on investments, and how you help your worst companies without investing more capital, is a huge part of being a great VC.