One of the funny things about being a VC is that after a couple of years you start seeing patterns and they keep repeating themselves. This is not a scientific analysis by any means but I've concluded that as entrepreneurs, it's those coming from little or nothing who seem to have the greatest success. I bring this up because I've had the experience of being on the tail-end of deals when stuff really started going all kinds of wrong. I'm a bit disappointed to admit that the majority of entrepreneurs who had little to lose gave up far earlier than those who were all in. Seems like common sense but is often overlooked in early stage tech deals which are venture backed. Further, it's surprising how many companies were close to failure and then ended up succeeding in the end. It was always the scrappy, hungry entrepreneur who saved their company because they wouldn't give up. VC's and other parties were involved yet it was always the entrepreneur who led the charge.
I am sure there are outliers in the fold who had successful parents or were otherwise already wealthy or at least very well off when launching their ventures. Further, this commentary does not include serial entrepreneurs as they are a very select and small subset. Yet, I can't say that my experience has led me to many of these founders who start at the top and stay at the top. Quite the contrary! The majority of deals I've seen at this point have again and again shown me that those who "default to poor" fight like mad to keep their businesses afloat and will go down kicking and screaming. Those who have a solid financial cushion or parents with positions in their firms to park them in walk away earlier and quicker.
Do we consider this when looking at deals to back? Well, yes and no. It's not one of the questions which comes up immediately. Yet, somehow I've started to get a feel for when this question needs to be asked. Again, there are outliers and we love it when we find them. Either getting in on a deal with a serial entrepreneur at the helm or someone who is just inherently a great entrepreneur regardless of background is the name of the game. Yet, when all our homework is done and we still have a gut feel that something is off, we'll start looking to see what the chances are that you'll fight with all you've got to win it. I'll go with the entrepreneur reverting to Ramen and public transport if they fail nine times out of ten.
