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August 4, 2015
Foundation Capital
Last week was my first post in a series I will write during my time at Foundation Capital, where I document my takeaways from partner meetings. My goal is to shine a light on a process that is typically opaque and unavailable to entrepreneurs. Here is a link to last week’s post. Each week I’ll try to come up with a takeaway that’s relevant to early stage tech entrepreneurs.
Week 2 Takeaway: VCs care as much about winning as entrepreneurs.
If you are an early stage founder/CEO, you take everything to heart. If you lose a customer, it hurts. If you lose a key employee, it hurts even more. If you screw up something in the fundraising process, you take it personally. You lose sleep over these things and can’t forgive yourself until you make them right. You wallow, you get angry, but ultimately you get better. What most entrepreneurs don’t know is that the other side of the table feels exactly the same way.
During the discussion this past week at the Foundation partner meeting, the partnership held a postmortem on a recently lost deal. It’s rare for Foundation Capital to lose deals, and when they do, the partnership immediately figures out ways to improve the process so it never happens again. I was impressed by how collaborative the discussion was. Every aspect of the deal was discussed—from process to references to deal structure. Every area was examined exhaustively, all because the partnership wants to improve.
It’s fascinating watching this type of discussion in the context of being a recent founder/CEO. I think the perception is that VCs have so many potential deals that they don’t have to work hard to win. The way the VCs actually view it is that it’s not a deal worth winning unless you have to work hard to get it.