After being a serial entrepreneur for longer than I care to remember, I moved to the “dark side” and founded a VC. I promised myself to make entrepreneurs a top priority. And that’s what Glilot is all about. For us, the success of our entrepreneurs is a major part of our goal. Sure, the value we create for our Limited Partners (LPs) is very important as well, but our entrepreneurs are just about at the same level. We must make them happy, otherwise, no matter how high our returns will be, we will not be successful in the long run. Entrepreneurs’ “success” or “happiness” is very abstract, so what does it really mean? And how can we measure it?
Let’s face it, we like to measure everything we do, from the numbers of deals we see to the number of meetings we take. As any other investor, we measure the returns we provide to our LPs. Many parameters cover a venture performance vis-à-vis its investors (I am happy to say that we have top rankings in those!), but how can we measure a fund’s contribution to its entrepreneurs? Since this is important for us (and yes, it really is!) we need to be able to measure it on an ongoing basis. If we don’t, we cannot align everyone around it and we cannot improve the processes toward it. If we cannot measure it, it is just a slogan. A nice slogan, but an empty slogan all the same.
So what does it mean to be a “Founder Friendly” Fund? Some would argue that it’s all about providing the best investment terms to the entrepreneurs. If this is enough, then that would indeed be easy, peasy. But as we all know, you can provide the best terms in the initial deal and still fail the entrepreneurs in the long run. Maybe it’s about the amount of time you spend with them? The amount of leads you provide them? Let’s face it, none of these feels right…
To me, the measure needs to be about actual monetary contribution. Why? Well, at the end of the day, we are all business people and the ultimate goal of entrepreneurs is to generate wealth. As we all know, financial indicators are very good ones since they are easy to understand and evaluate across different geographies and categories.
So what is the right “Friendly Fund Index”? One option would be to look at the amount of wealth generated for the entrepreneurs, which sounds like a good indicator. However, it may be biased when a single entrepreneur is enjoying a very high return while others make nothing. Maybe a better indicator will be the percentage of entrepreneurs making money from exits and / or from a secondary sell? Or percentage of entrepreneurs reaching an exit or IPO? The jury is still out!
So, what do YOU think? what is the best indicator for a friendly Fund? We want to hear it directly from YOU! Please tell us what you think in a reply or a message.