{"id":1865,"date":"2015-12-28T20:14:11","date_gmt":"2015-12-28T20:14:11","guid":{"rendered":"https:\/\/leadershipshape.com\/wardroom\/?p=1865"},"modified":"2016-01-01T20:15:01","modified_gmt":"2016-01-01T20:15:01","slug":"money-isnt-the-only-valuable-thing-a-vc-can-give-a-startup","status":"publish","type":"post","link":"https:\/\/leadershipshape.com\/wardroom\/money-isnt-the-only-valuable-thing-a-vc-can-give-a-startup\/","title":{"rendered":"Money isn\u2019t the only valuable thing a VC can give a startup"},"content":{"rendered":"
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Ken Yeung<\/a>
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\"A<\/div>\n
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Above: A visitor views the electronic sculpture ‘$’ by Tim Noble and Sue Webster at Sotheby’s auction house in London June 8, 2015.<\/p>\n

Image Credit: REUTERS\/Toby Melville – RTX1FMQP<\/em><\/div>\n<\/div>\n<\/div>\n

Entrepreneurs know it can be difficult selecting the right investors to fund their startup. But instead of choosing firms based on which has a celebrity partner or offers the most money, Norwest Venture Partners<\/a>\u2018\u00a0Sergio Monsalve<\/a>\u00a0counsels startups to select venture capitalists who\u00a0will be there for the long term.<\/p>\n

In fact, he offers several points a company must consider before taking money from an investor: Are they proficient in your space? Has the firm demonstrated that they are dependable in good times and bad? Are they aligned with your vision?<\/p>\n

Norwest Venture Partners (NVP) may not be as well-recognized as the likes of Andreessen Horowitz, Kleiner Perkins Caufield & Byers, Greylock Partners, and Google Ventures, but for over 50 years, the firm has been positioning itself as more than just an investment provider. \u201cEarly on we realized that we needed to be catering to the needs of entrepreneurs and had to look at [them] before [the need] arises,\u201d Monsalve told VentureBeat in an interview.<\/p>\n

He further explained what it means to be service-oriented: \u201cBeing a multi-stage firm with a large fund, [entrepreneurs] get the best of both worlds (capital and resources). You work tightly with a few partners that can help you throughout your company\u2019s life cycle. How do you start a company from scratch, establishing product fit, scaling, IPO, creating a reputable company model?\u201d<\/p>\n

All venture capitalists aren\u2019t created equal<\/h2>\n

When a startup decides to accept funds, Monsalve believes it\u2019s important to consider what else investors are bringing to the table. NVP, for example, touts its entrepreneurial roots (many of its partners were founders themselves) and a database of knowledge around different market conditions, trends, and other insights gleaned over the past 53 years.<\/p>\n

He cautioned that many venture capitalists are unwilling to extend themselves beyond the initial outlay of money. \u201cA lot of people that are investing today just want to write a check and pray,\u201d Monsalve said. \u201cThat\u2019s not a strategy that works \u2014 that\u2019s called betting. [NVP] wants to invest and partner with startups and work with them.\u201d\u00a0He added that NVP sees its role as essentially entrepreneurial, in that the company has \u201cskin in the game\u201d and is willing to do what it takes to help the business succeed.<\/p>\n

Monsalve explained that entrepreneurs need partners who aren\u2019t afraid to dive into the trenches when things go bad. For NVP, that includes more than what they put in financially;\u00a0its partners are willing to put in the work to help out in whatever way it can: \u201cYou can call someone at 5 a.m. or ask for help\u00a0on the weekends \u2014 this doesn\u2019t happen if you just pick someone off the street and give them a few shares.\u201d<\/p>\n

\"Wallpaper<\/p>\n

Above: Wallpaper along a building in London, England near the Grand Union Canal.<\/p>\n

Image Credit: Edward Simpson\/Flickr<\/a><\/em><\/div>\n<\/div>\n

How to pick an investor<\/h2>\n

Monsalve believes it\u2019s important for a startup to look for firms that share its ideals. Be clear about what the investor sees for your startup as it grows from early stage to potentially being acquired or going public; otherwise things could end badly for everyone. \u201cYou can\u2019t do shotgun weddings,\u201d he said.<\/p>\n

He counseled that the only way to be sure you see eye to eye with prospective investors is to have detailed conversations. Are they thinking about major issues the same way you are? What are their thoughts about contingency plans, such as pivoting, in case things go awry?<\/p>\n

Beyond finding like-minded investors, founders also need to determine if the firm has proven competency in their particular space. This is perhaps the most obvious concern, but for Monsalve, it\u2019s not enough just to have knowledge\u00a0\u2014\u00a0one must also be constantly curious about the\u00a0changing landscape. A smart investor will be knowledgeable about recruiting, establishing company culture, dealing with ways to grow the company, and dozens of other issues that a startup will have to address.<\/p>\n

What if you\u2019re gearing up for a potential exit, either via acquisition or public offering? That\u2019s something a partner should prepare you for, Monsalve said. This is a perk that NVP offers through its annual investment summit, which introduces\u00a0investment bankers, portfolio managers, and analysts to\u00a0companies thinking about going public soon. This opportunity gives\u00a0startups a chance to learn the ins and outs of the process before preparing for their own IPO.<\/p>\n

Last, but certainly not least, is whether a firm has proven itself to be a \u201cgood actor,\u201d not only in the best of times, but also when a company is under duress \u2014 have they demonstrated grit, resilience, and a willingness to stick it out? Monsalve brought up the example of Lending Club, a peer-to-peer lending company that was on the verge of being shut down by the Securities and Exchange Commission<\/a> (SEC) in 2008. As an investor, NVP counseled Lending Club to work with the SEC to address its\u00a0issues and provided enough funds<\/a> to keep the startup operational. Not only did Lending Club\u00a0remain afloat, it settled with regulators and even went public<\/a>.<\/p>\n

\"NEW<\/p>\n

Above: NEW YORK, NY \u2013 DECEMBER 11: Lending Club Corporation, led by founder and CEO Renaud Laplanche and members of the company\u2019s management team, ring the opening bell at the New York Stock Exchange on December 11, 2014 in New York City. (Photo by Ben Hider\/NYSE)<\/p>\n

Image Credit: Lending Club<\/a><\/em><\/div>\n<\/div>\n

Some would say that NVP supported Lending Club to protect its own financial interests. While\u00a0Monsalve didn\u2019t disagree, he maintained that a good firm will put forth all of its available resources to help a company succeed. But beyond a firm\u2019s willingness to double down, startups have to ask themselves, \u201cDoes the investor have the skill set and knowledge necessary to help us out of any jam? Do they have the teams in place so we can educate ourselves about regulatory affairs and deal with government issues and other concerns?\u201d<\/p>\n

Monsalve believes NVP offers the additional resources that can prove crucial in a tough situation. \u201cWe provide air cover to help entrepreneurs figure out what\u2019s coming up next to prepare for what they need to do,\u201d he\u00a0explained.<\/p>\n

Choose the one that works for you<\/h2>\n

While we\u2019ve highlighted some of the things that NVP does for its portfolio companies, it\u2019s important to note that it\u2019s not the only firm to offer this type of long-term support. Others, like Google Ventures, Andreessen Horowitz, and Spark Capital, also offer entrepreneurs invaluable resources through mentorship, connections, and more. But the advice that Monsalve provides can be helpful for anyone looking for the right investment partnership.<\/p>\n

\u201cAt the end of the day, [entrepreneurs] have to double and triple down on their work,\u201d he said. \u201cYou can\u2019t be brand shopping.\u201d<\/p>\n

In the end, whether a firm is high-profile or not, it comes down to finding the investor that\u2019s right for your company. And that, according to Monsalve, is not the investor\u00a0that\u2019s just trying to get from one funding round to the next, but rather a firm that understands and supports your vision, and has the resources and character to see it through.<\/p>\n","protected":false},"excerpt":{"rendered":"

Ken Yeung December 28, 2015 1:06 PM Above: A visitor views the electronic sculpture ‘$’ by Tim Noble and Sue Webster at Sotheby’s auction house in London June 8, 2015. Image Credit: REUTERS\/Toby Melville – RTX1FMQP Entrepreneurs know it can be difficult selecting the right investors to fund their startup. But instead of choosing firms … Continue reading Money isn\u2019t the only valuable thing a VC can give a startup<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"pmpro_default_level":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[6],"tags":[],"class_list":["post-1865","post","type-post","status-publish","format-standard","hentry","category-startups","pmpro-has-access"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p4MGMb-u5","_links":{"self":[{"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/posts\/1865","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/comments?post=1865"}],"version-history":[{"count":1,"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/posts\/1865\/revisions"}],"predecessor-version":[{"id":1866,"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/posts\/1865\/revisions\/1866"}],"wp:attachment":[{"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/media?parent=1865"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/categories?post=1865"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/tags?post=1865"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}