I Do Not Hate VCs

It’s been an interesting week.  I posted the note about the Zappos deal and got quite a few comments and emails about it.  I will readily admit that the use of the word “hate” was a bit pejorative, but I had a point to make and at the time it seemed appropriate.  I don’t think VCs hate entrepreneurs, but I do think that there are things that VCs do that make life for entrepreneurs very hard.

In some of the discourse I have had over the past week on this topic, I felt a bit like George Costanza trying to explain to his co-worker that he has black friends (for the record, I am an African American, on the off chance that this paragraph offends someone’s sensibilities).  I have VC friends.  I have many VC friends.  I’m not sure that my opinion of the trade has improved much over the last handful of years, but I do like some of the people in the trade.  My opinion of the trade itself has more to do with my observations of the value delivered versus the value extracted by VCs.

I was asked if there were any VCs that I do like, and while I won’t generalize and say that there are firms that I like, there are a handful of VCs I have met in my travels who seem to have good heads on their shoulders, want to do the right thing, are willing to tell you “no” (instead of stringing you along because it costs them nothing), and are people whom I would go to with a deal if someone was looking to raise money and needed an introduction.  These are folks at firms that invest along the entire spectrum of deals, but these 10 are some of the “good guys”:

  1. Aaron Bendikson – Oaktree Capital Management
  2. Mike Brown – Foundation Capital
  3. Pete Higgins – Second Avenue Partners
  4. Alex Lloyd – Accelerator Venture Partners
  5. Greg Martin – Redpoint Ventures
  6. Matt McIlwain – Madrona Ventures
  7. Chris Michalik – Kinderhook Industries
  8. Patricia Nakache – Trinity Ventures
  9. Rakesh Sood – NTT DoCoMo Ventures
  10. David Wassong – Soros Private Equity Ventures
  11. BONUS 2 for 1: Charles Beeler & Ray Schuder – El Dorado Ventures

When and if you are considering raising money from venture investors, make sure you understand what you are getting in return.  There are many investors who will wow you with stories of great exits, or about the “value” they bring to the table, but in reality, many of these VCs have never actually run a business.  They have never had payroll responsibility.  They don’t know what pressure you are feeling from first-hand experience.  That turns out to be very important when your back is against the wall.