Mark's post on what you should look for when picking a VC saw a lot of play the past couple of days. As usual, Mark writes extensively about what he feels he would do when deciding which investor to work with. As usual, his posts give great and thorough advice. Unfortuntely, in this case, I think he's taking the wrong approach to the problem. Further, I agree that I, along with a ton of other VC bloggers, often make this mistake.
Telling someone how to pick their VC is basically like telling a fat kid* how to pick his girlfriend. He should "find the girl that likes him for who he is!" "Pick her because she's interesting and not pretty!" "Make sure she is kind to animals!" Blah, blah, blah! I don't have to give you the list of things that "fat kid" hears. Unfortunately, fat kid doesn't have the problem of knowing how to "pick". Honestly, he's probably read everything there is to read about how to "pick" and "what to look for". The problem really is that fat kid probably doesn't have the balls to talk to girls. He is probably shy and doesn't have the circle of friends containing all those "pretty, interesting, fun girls!" He would rather die than blindly walk up to a girl and ask her out. Further, if he's actually had the courage to do so, he's been turned down and is ashamed.
The same goes for most start-ups. Telling them how to pick their VC is great but they are probably better served understanding how to get to the point of picking VC's. Again, Mark has posted about this in the past and he is one of the VC bloggers that goes deep in terms of giving advice. I am not crapping on his blog post and he's surely far smarter than I am. Unfortunately, as a young start-up, reading all these posts on "picking" is probably frustrating as hell so let me see if I can't help a bit on the "approach" verses the "decision".
So, how do you get to VC's? Well, it contains two major overlying themes and a bunch of hard work. Those two themes are (1.) your product and (2.) you as well as your team. Let's get product and team quickly out of the way. They better rock. There's a ton of posts out there on this. Go read them. Now, back to the main problem: YOU (or you and your cofounders!) Getting to VC's is all about YOU! Let's get back to "fat kid" for a second. How do I get fat kid a date? Well, I would first focus on fat kid himself. Don't be "fat" is my first word of advice. (All you politically correct, it's not about appearances folks can leave now. Reality is that you make a first impression on appearances.) Go to the gym. Start running. Join a team sport. Whatever....become active. Yes, it will make you "look" better but probably more likely it will put you in touch with other people. You will not only get more fit but you will build your circle of friends and they KNOW girls. Gyms contain girls. Football has cheerleaders and so forth.
Same is the case for the start-up. You are probably "fat" as a founder. No one knows who you are or cares about you. Get out. Go do things. Be at the events where VC's and entrereneurs hang out. Go to Barcamps and StartUp Weekends. Go to hackathons. Meet-ups! Whatever. Just get out there. Sitting at your computer in your office won't work. You can watch what others do and learn. If nothing else, mimic those who are successful. If you copy them long enough, you will develop your own style and feel comfortable with it.
Back to fat kid. I'd tell him that when he is around girls, he should talk to each and every one of them. Start with the mediocre ones! They don't get as much attention as the pretty girls (and are usually cooler anyway!) (Again, politically correct folks....move on!) This gets you the necessary practice and makes you comfortable. You need to know what to say and it has to come naturally or you otherwise look like an idiot.
Likewise for start-ups. You have to be able to talk to investors. In order to have your choice of VC's, you need to actually have a choice. If you haven't talked to at least ten of them, you won't even have two to pick from. There's a ton of competition out there and VC's are getting pitched non-stop. Pick some mediocre ones and go practice your story. You really have to shine nowadays to even get a first meeting. That second meeting is so unlikely that you better optimize best you can to get it. Practice, practice, practice.
Third thing I would tell fat kid is that life is pretty simple but not easy. You can meet the model of your dreams but after you start dating her, she turns out to be a complete bore.** It really isn't about the looks, yet we all know that. We unfortunately always get thrown for a loop by the looks. If you were the fat kid, you want your "share of the pie" too. This makes us nervous and in hindsight, we always ask ourselves why we were so nervous or concerned about things that couldn't matter less.
Same is the case with VC's. You know you shouldn't pick for brand or hype. Nevertheless, admit it....you find Kleiner or Sequoia far sexier than "So & So Regional Fund". Further, you're going to be crapping yourself pitching them far more than you would that regional fund. It's all irrelevant. In hindsight you will find out whether your VC really is a good partner or not by working together with them. No matter HOW MUCH diligence you do, something about your VC will surprise you after the fact. They too are human. For all I know, they may be Mark Suster (best VC evah!!!) :-) yet a month after they invest are getting divorced and couldn't care less about you. That's just the way it goes. Don't sweat it.
I could go on and on. Remember that it's not really about picking the right VC. You can never be 100% correct. It's far more about growing your business and serving your customers. Picking a VC is a part of a process which contains so many steps that years down the road, you'll laugh at how nervous you were preparing for a pitch.
*I was a fat kid so I speak from experience!
** I 've dated models and they are boring!