Willie Loman – VC Style
When I first joined Battery in 1999, I thought it was important to sound smart, to speak about bits and bytes. Then I realized almost everyone in VC is smart. It took some time to recognize the importance of selling real added value along with your money. VCs must earn respect investment after investment. Very few can rest on the laurels of “old respect” or reputation (certainly some do and deserve to).
The best companies will always have options, so the best VCs must be naturally humble and convince entrepreneurs why we deserve to make an investment. Most VCs will tell you they will help companies refine the business model, provide introductions and assist in recruiting. The very best will deliver on this promise regularly and look for unique ways to support an investment—joining a team or putting other daily responsibilities on hold without pause.
I actually learned this a bit by accident. In late 2001, a group of smart algorithmic specialists out of Israel came to Battery looking to build a business. They became a team in residence, big brains looking for a big problem. I set up a road show for the team, introducing them to experts across select industries, including the one they decided to pursue: storage. Thus, we became Kashya’s outsourced BD /market research arm long before we discussed a term sheet. Is this risky? Perhaps, but courtship is an important process which helps both sides understand future value.
There is, of course, a catch. Clearly, entrepreneurs can sense insincerity. It might seem strange that a VC would be insincere. Why would a VC bother to spend the time? At a time when VCs are raising funds at the highest level in the last 5 years, it has become competitive to fund the best companies. There is pressure to get the dollars out and invest in the best companies. But unless you’re genuine— unless you truly believe in the company, the entrepreneur, the market and the vision— take your “bag” and move on.
You should also be prepared to help without strings. While few of the opportunities I evaluate each year result in a close investment, I truly like to help entrepreneurs even without the opportunity to invest. Although the movie wasn’t the greatest, the concept of Pay it Forward is one of my favorites. If you are lucky enough to close the sale, you better provide top-shelf customer service, or you’re in danger of hamstringing your investment and damaging your reputation.
Earlier this year, I had the chance to put my money where my mouth was. Nick Grouf, founder and CEO of Spot Runner (one of our investments) and Roger Lee (Battery GP) approached me to join Spot Runner full time for a short period. I jumped at the opportunity to dig in side-by-side with the management team.
Roger and I had been supporting the company by providing support around operational roll-out, hiring and business introductions. When I considered joining the company full time, it was easy to go beyond the traditional VC roll because I believe in, and possibly more importantly, love the business- an Internet Ad Agency that makes it affordable for small and medium businesses to advertise on local TV. Joining a company full time is an unusual move for a VC as I took myself out of the day to day flow of new investing and focused on lending full-time operational support.
And what does this say about the CEO? Nick believed so strongly in the Company and was eager to let his “money” lend a hand. The Spot Runner experience reinforced adding value and proactive investing is so much more than showing up for board meetings.
So how do I hope to sell going forward? My path is not deliberate. I hope I’m successful at selling simply as a byproduct of following my passions. I spend time getting to know entrepreneurs of all types who focus on trends and theses where I would like to invest: new media agency models, next generation CDNs, the power of community marketing, innovative content creation strategies, local advertising, wireless marketing and the general shift of advertising from radio and print to online and outdoor. I seek to learn and share my thoughts around these theses and hopefully find a great innovator or two I can support along the way.
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About the Author, Kara Nortman
Kara has been with Battery since 1999, taking a break from 2002 to 2004 to pursue an MBA. She currently focuses on investments in the Internet and new media sectors. She sits on the board of Blue Flame Data, is actively involved with The NewsMarket and Spot Runner, and held a board position with The Loan Page, which was acquired by HouseValues (Nasdaq: SOLD). During her initial four years at Battery, Kara focused on the communications sector, including investments in EnvoyWorldWide, Kashya (acquired by EMC), Looking Glass Networks, and Cbeyond Communications (Nasqaq: CBEY). Kara has held positions in Microsoft’s corporate development group, where she evaluated product strategies in the healthcare and mobile markets, and negotiated and structured a $35 million preferred investment. She has also worked in the Private Equity Group at Morgan Stanley Dean Witter where she analyzed investment opportunities in telecommunications for a $1.9 billion private equity fund. While there, she developed operating business plans for early stage communications companies and was involved in debt and equity financings. Kara holds an AB in political science from Princeton University and an MBA from Stanford University. Visit Kara’s blog at www.ventureinside.com.