036 | Navigating the VC Landscape⎟How to Choose the Right Investor for Your (Constru-Tech) Startup
Description
This week:
(00:00 ) Avoiding harmful VCs that obstruct progress or give detrimental advice
(05:31 ) Realistic expectations for value-add from investors
(24:08 ) Identifying an investor's true strengths and expertise
(26:22 ) Cautionary tale of ex-founder VCs providing misguided advice
(34:28 ) Finding an enjoyable, long-term investor partner for the startup journey
In this episode, Patric and Shub dive deep into the crucial factors founders should consider when selecting a VC. They emphasize the importance of avoiding investors who might hinder the company's growth or force harmful advice upon the founders, noting that a staggering 70-90% of VCs either contribute no value or actively harm the companies they invest in. The duo also discusses the need for founders to have realistic expectations about the value-add they can expect from investors, suggesting that trajectory-changing insights are rare and that founders should view the relationship as an intersection of timing and expertise.
Patric and Shub also explore the importance of identifying an investor's genuine capabilities by directly asking about their superpowers and the specific situations in which they can provide exceptional value. They warn founders to be cautious of VCs who are former founders or operators of unicorn companies, as their past experiences may not always translate effectively to an investor role and could lead to misguided advice during times of adversity.
The conversation also touches on optimizing angel investors by prioritizing those with strong networks within the startup's industry vertical or with specific expertise in company-building. Finally, Patric and Shub emphasize the significance of finding an enjoyable, long-term investor partner to make the startup journey more pleasant, given that founder-VC relationships often outlast the average marriage.
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