I just met up with a local journalist and in casual chat about the venture capital scene in Boston came up a discussion around Boston VCs wanting to bet on ‘known entities’, i.e. entrepreneurs that either the same VCs or others have bet on before, and have been somewhat successful with. I have heard this term a few times now and since I am still new to the field, trying to make sure I understand it well. Obviously interested in learning what you think. Some thoughts:
- When you look at some of the more successful VCs, they seem to have killer instincts for entrepreneurs. Not so much the technologies, but people who drive businesses to success. So yup, people matter a lot and one should certainly bet on them before anything else.
- So who are the people we should bet on? Are these wild eyed first-time entrepreneurs who dare to think big and whose passion is infectious and scary crazy at the same time?, or those who have carefully thought through answers to our questions?
- Are the ‘known entities’ in our circles really the big hitters? or do we risk restricting ourselves to entrepreneurs who have had small successes in the past and can’t see past that to those billion dollar exits VCs would like to see? There are not that many billion dollar ‘known entities’ around, esp in Boston. At least not in my (admittedly small) circle.
- Should we worry about what I call a ‘closed box syndrome’, i.e. – group-think – if we keep talking to the same entrepreneurs on their 4th, 5th, 6th business plans? How do we think out of the box? I have observed a tendency among some entrepreneurs to think VCs must know what they are talking about and hence they change their pitches dramatically to suit the VCs. Generally it is not a good idea. Yes, take advice, but your idea is your idea and I am only reflecting on it from the outside.
- How do you marry the ‘known entities’ with the aspiring first-time entrepreneurs to create the potential killer team? Maybe this is one place where VCs can help as matchmakers? But this is not a recruiting role. The passions have to intersect as founders for the creative juices to flow.
Anyways…just thinking aloud. Good VCs bet on great entrepreneurs, and as I observe my senior partners at GC, I see that in practice. I need to find those great entrepreneurs myself. So if you think you are one, and open to a conversation, just drop me a line.