A moment of guilt

Posted on March 29, 2017. Filed under: Uncategorized |

About 10 minutes ago an entrepreneur walked into the office i’m sitting in, who i backed four years ago, who i haven’t seen or stayed in touch with basically since we invested. His company was successful, my investment in it returned real capital to our investors at Lerer, but I’d be lying if I said I didn’t feel a little bad at this moment. We earned our spot in his round because I had studied his space deeply and our conversations during the fundraising process were dynamic and interesting. Although not stated, there was an implicit suggestion that the level of dialogue we achieved during the fundraise would persist over the life of his company’s development and growth. The reality, however, is that this founder was a repeat entrepreneur…he knew what he was doing, never really asked for anything from me, I had a two jobs, building my own companies and continuing to invest at Lerer, and I just kind of never went to that deeper level with him. This story is not unique to this one guy…there are a handful of founders that I’ve invested in over the years that fall into a similar bucket, and of course there’s more than a handful that fall into the “deeply involved and strong connection” bucket…but i do and always have felt some guilt around this sometimes surface level dimension of seed investing, and especially seed investing while acting as full time CEO of my own companies.

Some of the most rewarding aspects of venture capital investing are the bonds and shared experiences that you get to have with founders you back. For the 6 years I invested with Lerer, I was able to achieve this often…but I always felt spread thin. I never went into a deal saying I would do x, and then delivered less. But I also always wished I had the time and attention to practice a very “hands on,” proactive approach with all of our founders…I always wished I could deliver more than was promised or expected…and I just couldn’t do that for everyone. My friend Chris Dixon used to be very clear with founders he seeded. I think partially borrowed from Ron Conway, he would say “i get involved during fundraising, selling, or something really hairy that needs my attention..that’s what you’re gonna get from me…and you can the other stuff from other people.” I liked this candor even if it’s not the model I wanted to replicate exactly…in hindsight I wish that I was more explicit about how and when I would get involved with companies I backed. Not to set maximum expectations as in the case of Chris, but at least to set minimums that I could hold myself to. In practice, the founders who sought my support over the years became my most attended to…and I just didn’t have the time and mental bandwidth to be as proactive with the ones that didn’t.

Going into this next chapter of my venture capital life, I am making some structural changes to improve along this axis. I’ve cut out the two simultaneous full time jobs thing..being a venture backed CEO and deeply supporting EVERY CEO you venture back just isn’t possible…it was an amazing run while it lasted, and there was a lot that was incredible, but it’s more than a full time job to be the kind of partner to ALL that I have been to most…and that’s the bar I’m going to hold myself to going forward. I’ve also chosen to design a platform built to invest in ~15 companies per fund instead of 50 companies per fund. There are a lot of other reasons for this that have nothing to do with depth of relationship with our portfolio founders, but obviously this structure is going to lead to more depth. I never want to run into a founder again and feel bad about the amount of effort and energy I put into our relationship. This guilt may be in my head, and it may be exacerbated by the fact that this specific founder’s success is part of the “successful investment track record” that I will rest on if I end up raising a new fund from LPs, but it feels shitty to have a single founder in my portfolio with whom I am not genuinely close. I can’t go back in time, but I can make sure I am set up structurally to do better going forward.