What lack of VC conviction looks like

A pretty interesting part of being a VC is having a front row seat to observe the approach of other VCs that want to invest in your portfolio companies.

I’m not talking about tire kickers here.  I’m talking about VCs that have genuine interest.

The stronger the portfolio company is performing, the more interesting this gets as VCs put on their ‘A game’ to make the best impression possible.

Every VC thinks their ‘A game’ is well, an A, but what has been pretty fascinating to me is how many VCs fall short in the eyes of entrepreneurs.

When this happens the most common word I hear from the entrepreneurs we work with is that it seems like the VC lacks ‘conviction’.

But what does a lack of conviction look like?  How can you, as an entrepreneur, spot it yourself?

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None of the above is meant to demean the importance of financial analysis or insinuate that it isn’t Ok to ask questions.

What its meant to shine a light on is:

  • The VCs that show conviction to entrepreneurs show up prepared, focus on talking about the future and then validate that historical metrics support the story.
  • The VCs that lack conviction have the founder educate them, make sure the historical metrics meet their investment requirements and then see if there is a vision.

Its no surprise that the VCs with the best reputations very often fit squarely into the conviction category and understand that there is more to building a big business than financial formulas.

get in touch: Arthur Ventures; patrick@arthurventures.com

3 Comments

  1. Nice summary, Patrick.
    Your overview raises the question whether for Corporate VCs you would compile the same overview. Or, being corporate, do they approach the entrepreneur differently?

    1. Hi Leo – I think the same overview applies, but most all strategics would be more likely to fall in the conviction category at the time of the investment. The trick with strategics is to try to structure an investment to protect yourself should their strategic priorities change over time, which they often do. Check out the investment section of this post for some more of my opinions there – https://pmeenan.com/2014/07/15/my-10-guidelines-for-startups-on-partnerships-with-big-companies/

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