There is often conversation about what makes a great VC. The typical buzz words surrounding value-add, network, recruiting and so forth usually pop up. The same goes for entrepreneurs and their companies with their own set of buzz words. Yet, the reality is a bit different and I'm going to define it quite digitally. Who do I think the best entrepreneurs are? The ones whose companies deliver the greatest returns on my investment. I don't really need to like them, nor be friends with them and so on. I just want to make sure that I get loads more money back than I've invested. The same goes for VC's. My LP's (the investors in our fund) don't really care much about me personally. Nor do they really care whether entrepreneurs like me or not. They simply do a calculation every time I come to raise additional money. If I'm not delivering a significant multiple on their invested capital, I'm out of luck.
Let me clarify one point. There are obviously characteristics for both VC's and companies which lead to one or the other being the best at what they do and they matter. If you're a total dick, eventually entrepreneurs are going to stop coming to you. Same goes for the entrepreneur. He or she won't be able to hire employees, no one will work with him and so forth. There are so many interlocked characteristics which lead to success and I am the biggest proponent of these characteristics. That is not the purpose of this post though.
Ultimately, what makes a great VC or a great company is a matter of perception and varies based on whom you ask. I laugh a bit when reading lists written by one or the other. Sure, you may be a great VC in the eyes of an entrepreneur but if you aren't delivering the necessary returns for you LP's, you just aren't good. Same goes for some companies. They are a joy to work with and you end up making friends, etc. Yet, if the company isn't delivering a VC-like return for you, it's just not good.