Founder Advice: These Must-Read Tips From 9 Elite Venture Capitalists Will Change The Way You Run Your Startup

The best founder advice often comes from experienced venture capitalists.

After all, the name of the game for investors is identifying startups with bright prospects. They protect their interests through an uncanny ability to spot startup-damning warning signs from a mile away. And many of the world’s best VCs have built successful startups of their own.

Of course, venture capitalists know how to put their money where their mouths are. But their words are valuable, too. Here, big-name, deep-pocketed VC titans tell founders why they may not want to hire that “cultural fit,” what VCs really look for in a desirable prospect, why the long game is more important than early-stage profitability, and more.

1. Your team will (likely) turn over three times on the way from startup to business of scale.

“The people you need at your side when you are just getting started are generally not the people you will need at your side when you have five hundred or a thousand employees. Your technical co-founder who built much of your first product is not likely to be your VP Engineering when you have a couple hundred engineers. Your first salesperson who brings in your first customer is not likely to be your VP Sales. And your first community person is not likely to be your VP Marketing.” – Fred Wilson, co-founder of Wilson Square Ventures

Read the full blog post here: From The Archives: Turning Your Team

2. Focus on “basecamp”—where you begin your startup journey—before raising too much money or looking too far ahead.

“There are very few ideas that are obviously a billion-dollar idea from the start. So what should you do?

I advise founders to focus on what I call ‘basecamp,’ which is the first level of success or validation at a startup. Raise only the money you need to arrive at basecamp and build only the team required to make it there. The advantage of basecamp is that once acclimatized you can look for the right route up the mountain and from that vantage point you know a lot better what your options are.” – Mark Suster, managing partner at Upfront Ventures     

Read the entire article here: How to Build a Startup & Understanding Venture Capital   

3. It’s not all about how profitable your startup is right now—remember, it’s a long game, for both investors and founders.

“I’m longterm greedy, which means ultimately my venture success is going to depend on quality of company exiting, not pump and dumps, or millions in fees. Phosphorous burns white hot but not very long. Unsustainable revenue curves willed into existence in order to prove growth ahead of raising more capital is the organizational version of phosphorous. I want furnaces – a sustainable heat source which goes as long as you feed it. Well, technically I want furnaces that eventually stop burning wood and start spitting out wood, but whatever, it’s a metaphor.” – Hunter Walk, partner at Homebrew

Read the full blog post here: Why I’ll Sometimes Fund a Startup And Tell Them to Stop Making Money

4. What matters most when pitching venture capitalists depends on what stage your startup is in.

“At the seed stage, when a startup is brand new, the decision is driven almost entirely by the people. Who are they, and what is their pedigree and track record to cause one to expect that they can build something special?

At the venture stage, when a startup has a prototype or an initial product but not yet a fully functional business, the decision is some combination of the people, as with seed rounds, but also product/market fit—is there reason to believe that this product in this market at this time is going to take off?

At the growth stage, when a startup is fully in market and building out sales and marketing efforts to expand, the decision becomes far more about the financial characteristics of the business—particularly unit economics: can the startup profitably sell its product to each customer?” – Marc Andreessen, partner at Andreessen Horowitz

Read the full interview here: Marc Andreessen answers questions from Stripe Atlas founders

5. Don’t consider investor money real until it’s in your bank account.

“In the past few months, I have heard more than a handful of stories about financial commitments made that never showed up. What is shocking is many of these commitments have been made from funds that have yet to raise their own capital. They are not insignificant amounts of money.

The founders, most who are going through this the first time, believe that the commitments are real and then stop fundraising. Time passes and then the truth comes out. Well, it is going to take a few months because we actually don’t have the capital yet. How do you think employees would react to founders not being able to make payroll because they just have yet to raise the capital to pay them?” – Joanne Wilson, CEO of Gotham Gal Ventures

Read the full blog post here: Money Comes in Many Shapes and Sizes

6. Not all founder advice is equal.

“There are too many people giving advice who have been through one or two startups, none of which grew into a huge company, got to profitability, or an IPO. I think we all need to be a lot more discerning about where advice is coming from. The startup world, which is supposed to be tolerant of failure, rarely admits when failure occurs. We sugar coat everything and we’re so super supportive of each other, we never hold each other to a high standard—making the difference between real success and mediocrity nearly indistinguishable.” – Charlie O’Donnell, partner and founder at Brooklyn Bridge Ventures

Read the full blog post here: Get Off My Lawn! Crazy Kids And Their Sex, Drugs and Startup Advice!

7. Carefully consider who you accept investment from—especially when a potential investor would join your board.

“If you’re considering adding [an investor] to your board, that person is going to be on your board for years. And if you’re going to make that decision on the basis of having met somebody two or three times, that can go right, but it also has the potential of going very badly wrong—especially when everyone’s got their game face on and they’re doing their best to sell into the deal. And you don’t necessarily know the true nature, character, or ability to add value of that person.

So there is value in taking meetings, not just necessarily in the purpose of fundraising, but to see what [investors] are like, what their perspectives are, if they can help or not, and then seeing if they follow through and do help well ahead of the financing process. That’ll help you narrow down the set of people you would genuinely consider taking capital from.” – Jeremy Liew, partner at Lightspeed Venture Partners

Listen to the full podcast here: 20VC: Lightspeed’s Jeremy Liew On Why It Is More Important To Be Right Than Contrarian, The Most Common Mistakes Made By Hyper-Growth Companies & 3 Characteristics That Make An Individual Incredible At Sourcing

8. Don’t hire people just because they’re cultural fits.

“If attitude is a reflection of culture, the better you can define the target attitude you’re hiring for, the better you can avoid the risks of the opaque filter of “culture fit.” Without specificity, this filter is a catch-all, or a shell, which perpetuates the risky practice of “like hires like.” We like to hire people who feel comfortable.

But ‘culture fit’ can quickly become the filter that weeds out diversity in opinion and thought. So the better you can define the characteristics of culture that you are aiming to build — the better you define the attitude of the people you want in your organization — the more you can identify it up front. Candidates with a diversity of background and thought can share qualities in attitude. Frances Frei goes as far to say, ‘in interviews, don’t look for fit, look for difference.'” – Lily Lyman, Investment Principal at Underscore VC

Read the full article here: Don’t Hire For Culture Fit

9. Know how to present to investors—and consider how much time you actually have to speak.

“We think of [founder presentations] as being similar to a James Bond movie. Everyone who watches Bond loves the opening sequence, before the titles come on. There’s suspense, action, and unbelievable stunts – in essence, those first 5 minutes bring home why you love Bond, and that keeps you going through the next 2 hours of nonsensical plot twists.” – Aaref Hilaly, partner at Sequoia Capital

Read the full blog post here: How to Present to Investors