Over the last year I have reflected a lot on how I work with entrepreneurs. My thinking has consolidated around one simple concept:
Helping entrepreneurs to be bold
Boldness shows itself in a number of ways.
- Focus. Building a fast growth business requires brutal focus. Saying no to opportunities is very tough in a small company because so much feels like an opportunity that is too good to pass up. With the right input an investor can make it easier for an entrepreneur to be bold, to say no and to focus.
- Capital. It is much harder to be bold when you are undercapitalised. You have to chase revenue opportunities that are not core to you business. You can’t hire the right people. You can’t spend on marketing. The list goes on. Having the right level of capital, at the right time, with the right structure allows you to be bolder growing your business. As an investor it is my job to be an expert in capitalising fast growth technology businesses. We obviously bring our own capital, but it is much more than that, we should also bring access to other investors and lenders and the experience (scars) to help entrepreneurs navigate that landscape.
- People. People decisions in early stage companies are the hardest of the lot. Saying no to a preferred candidate at the last minute because of a poor reference, or letting average performing managers go are two good examples. When you are extremely light on resource already and you have spent a load of time and money hiring someone all the cognitive biases point towards the easy decision. Good investors help entrepreneurs to be bold in the their decision making by removing this emotional bias and letting the entrepreneur know they have your support.
- Knowledge. The more an entrepreneur knows about the dynamics of their business and their market the harder they can drive their business and the bolder they can be. Helping an entrepreneur put the structures and processes in place to deeply understand the dynamics of their business is a core skill an investor can bring. Giving entrepreneurs access to information and people who deeply understand their market is also a critical role for an investor.
Helping entrepreneurs to be bold sounds easy, it is not. It involves being disciplined, focusing on the long term, and not letting the short term biases inherent in working at a venture capital firm influence the way you influence the entrepreneurs you work with.