It’s the partner, not the firm

A large financial institution with access to virtually all venture capital returns data once did a study that determined that the vast majority of profits at each firm are generated by 1 or 2 partners.  In some cases it’s pretty obvious who these stars are- Mike Moritz at Sequoia, John Doerr at Kleiner, etc.  In many other cases it isn’t unless you are an industry “insider.”  So when someone tells you they just raised money from a top tier firm, a good follow up quesiton is “which partner?” since the non-star partners are probably as good at picking companies as a a tier B firm.

There is a big difference, of course, between being a VC who generates profits and being a VC that an entrepreneur should want to work with.  A star VC might be good at picking companies and winning deals, yet actually be a real jerk who doesn’t help the company at all.  But often star VCs do have better rolodexes, can be greater help raising follow on money, and are more influential within the firm if you need to do a “difficult financing.”

Another thing to understand is that who you are first introduced to within the firm is very important.  Why?   1) if you are intro’d to the wrong guy (and in VC unfortunately it is almost always men), that guy might reject you right away whereas another partner might have found your company interesting.  Once one guy dings you the other partners won’t give you a fair hearing for fear of offending the guy who dinged you.  2) VCs can be internally territorial, so if you are intro’d to one guy and he likes it, he might feel like it’s “his deal” when in fact you’d be better off with another partner (then you are stuck with the “roommate switch” problem if you recall that Seinfeld episode).

From my experience, picking the right partner is very important.  For example, in two companies I seeded, the same top tier VC firm invested in later rounds.  In one case the partner has been super helpful, and in the other case pretty much absent.  As I mentioned above, the partner’s influence within the firm also matters.  A influential partner can, for example, “pound the table” to do a follow on financing when you need it.  What stage the partner is in his career also matters.  Junior partners will typically work harder, but might also have “sharper elbows” when, for example, you are selling the company since he needs to prove himself by making the firm money.

So how do you pick the right partner?  Looking at their portfolio can help, but really this is where you need experienced advisors/seed investors who know all the people involved, their reputations etc and can make warm intros.

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