In Defense of Some VC Associates: An Open Letter To Bilal Zuberi
Dear Mr. Zuberi,
I came across your post recently discussing the VC associate sourcing model and thought I would share some of my thoughts. While you do not “rant” on all of us VC associates, and specify certain characteristics you deem we should be exhibiting, your post nonetheless suggests to entrepreneurs that if a partner is not the one reaching out or on the call, they are wasting their time with a response.
Before I delve into why that attitude might not always be the best way to proceed, first, let’s acknowledge that the associate driven sourcing model is quite prevalent within the industry. I looked at the top 30 early stage VC firms (Source:Pitchbook), and approximately 80% of them had associates, who presumably add value by developing investment theses, finding entrepreneurs, and ultimately doing the leg-work to support a deal decision. Clearly there are others who are also extremely successful with no associates on their team, but the starting point is to recognize that there are different paths to VC success.
Perhaps what is important for entrepreneurs is to worry less about who reaches out to call them and instead to get to know the totality of the team who would be working with them post deal close. Sourcing and winning a deal is only but the narrowest time slice in an on-going relationship that we hope will continue for years to come. It is less important who made the initial call versus who they would be working with the most post transaction — whether that be the associate, the partner, the managing partner or all of them. And it is okay if that interaction with the full team does not occur on the first call. Ultimately what is right for an entrepreneur is about the long-term relationship and the value-add.
Now, let’s get into why talking to associates might not be so bad after all:
1) We are on the SAME team as the entrepreneur. In many cases, associates are the ones compiling the company’s investment memo to get through committee. We are the ones pounding the table for the CEOs as to why we so strongly believe in the company, alongside the relevant partner, of course. There can never be a win-win situation by a CEO dissing associates because they think we have no say — because, trust me, more often than not, we do.
2) We might be young and might not have the same years of experience as the partners, but we are still aligned in the notion of wanting to help grow the business, in whatever capacity. This goes to the value-add point I made earlier — and remembering that a lot of that value-add happens post-deal close. At least in the firm for which I work, we spend as much time to be helpful to portfolio companies and from a practical standpoint that is a lot of work for both partners and associates. If we as associates sometimes lack all the judgment of a partner or industry knowledge of the entrepreneur, we are still there to be helpful with a range of tasks, let that be financial analyses, competitive comparisons, valuation work, ironing out the draft CIM or pitch deck for the next raise, and anything and everything else in between. The fact is, we are there as a resource and to not use us would be inane.
3) We, most of my generation, or call us the cohorts of the independents, believe in the capabilities of each and every individual. We believe in flat structures. We believe decentralized organizations will be the best performing yet, and, increasingly, so do a lot of other extremely intelligent individuals (just read what’s going on at Zappos here). Most startups today strive to exhibit that same culture, which in its essence is all about respect. How can anyone expect partners at a firm to respect her/him when they can’t respect a team member, whatever their title may be?
At the end of the day, no one will argue with you that ultimately partners are the ones making the final decision. We are there to support that decision making process though (for those firms that believe in the use and development of associates) and are true advocates of an entrepreneur seeking funding. Besides just having a level of humility, it might be in one’s best interest to not alienate us.