What makes investors like Bill Gurley, Chris Sacca, and John Doerr so great at what they do isn’t necessarily the size of their wallets. Rather, it’s the greatness of their personalities. Even so, when looking for a venture capitalist, many brands are not sure what qualities to look for.
Benefits of choosing a good venture capitalist
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Source of cash
While this is obvious, it’s still useful to mention that if you require funds to expand your business, then looking for a venture capitalist is a good idea. In fact, from the moment you close a deal with a venture capitalist, you can start funding your business growth. Having access to these funds can help you scale your business operations in ways you wouldn’t have managed on your own.
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Industry knowledge
The bare minimum that a venture capitalist should offer you is the funds for business growth. However, truly exceptional venture capitalists should also have enough experience in the industry to be able to offer you guidance and advice as you expand your business. After all, a good venture capitalist invests in industries that they’re very knowledgeable about, and they usually understand the startup ecosystem better than anyone else. In the long run, this expertise is a valuable asset for any organization looking to expand its operations.
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Network opportunities
In addition to their expertise, a good venture capitalist will also bring their connections to you. Whether you’re looking to hire a new CEO or you need help finding a new target market, a venture capitalist should be able to connect you with potential candidates and good opportunities for your business.
Qualities of a good venture capitalist
Many qualities of a VC make him or her the best. We’ve drawn from the list of qualities proposed by Steve Schlafman, a renowned VC, to build this list. We’ve also added a few qualities which we’ve identified from decades of working directly with startups.
1. Curiosity
Curiosity is everything when you’re looking for a VC. If the VC has no inclination towards learning new things and thinking out of the box, then they ought not to be a VC.
New founders bring forth ideas that are insightful and helpful for the company they’re investing in. Investing in the venture not only brings a VC the essentials of marketing; but also the opportunity to learn and create.
2. Expertise
Of course, expertise is important when looking for a VC. It is this expertise that will lead them to develop effective strategies for growing the startup they have invested in.
Any experience they receive from investing can, in turn, be used elsewhere. This can even help them not be led astray as this knowledge would make them aware of where to invest.
3. Passion
If a person with a good amount in their bank accounts also has the genuine will to welcome new ideas, they can be a very well-established VC.
The passion to work alongside the entrepreneur is a necessary quality for the emerging venture capitalist.
4. Focus
Focusing on the task at hand can be hard; however, to achieve good results from the investments a VC makes, they need to shut off any distractions that might lead them astray.
Dedicating the required time to what matters will take the venture to successful heights.
5. Network
Maintaining a flourishing network of relationships is as necessary for a new VC as it is for the startup.
6. Sales
What good would a VC be if they cannot provide relevant consensus?
Internally or externally, the VCs of the likes of Marc Andreessen have the ability to extend, sell and build consensus.
An emerging VC just needs to follow in these footsteps.
7. Emotional Intelligence
It is true that a VC has to look at the demographics of a company from a logical angle as much as possible because it is a matter of taking a grave risk. However, if every decision is made this way, it can be detrimental to the persona and the fame of the VC.
Venture capitalists generally have a bad reputation for being cold-hearted. If you prioritize logic over emotion in all your decisions, this could drive businesses that would’ve been good investments away. With the right balance of emotion and logic, you can build positive relationships with all your portfolio companies. However, at the same time, don’t get so invested in these companies that you can’t let a bad investment go when you need to.
Having subtle emotional intelligence and taking time to observe the emotions of others can take the VC to new heights. In fact, according to the ICC Workforce Trends Survey of 2020, emotional intelligence is among several must-have skills that leaders must possess to succeed.
8. Conviction
Opposition is the major drawback of investing.
There are always people who will tell you what great a mistake you are making. For this reason, one of the things that makes a great VC is his ability to ignore the naysayers and work happily where his expertise and his heart take him.
9. Drive
Being a VC might look exciting on Shark Tank. Even so, it’s exhausting in reality. A good venture capitalist should have the energy required to meet multiple startup founders a day while remaining focused, discerning and positive.
It’s important for a VC to give each pitch equal attention. A VC who allows the pressure of the job to influence their decisions won’t be able to make wise decisions about which startup is a worthwhile investment.
10. Ambition
Not all startups turn out as successful as Facebook. For this reason, being a venture capitalist always involves some level of risk.
Startups will always have a great pitch for the venture capitalists they meet, and sometimes it’s difficult to differentiate between a wise investment and a risky one. Even so, it would be unwise to hold off investing in any startup due to fear of the unknown. The ability to invest in a startup without seeing the whole picture is an essential part of what makes a good VC.
11. Vision
The best venture capitalists have a vision for each brand they come across. If the person you’re considering can’t picture where your brand could be in 10 years, then maybe they’re not the right fit for you. After all, you need your VC to believe in the success of your company. A VC who has dynamic thinking and can see the possibilities that lie ahead is worth their weight in gold. Having a long-term vision is especially important in times of crisis when you need help focusing on the silver lining.
12. Educated risk-taking
Investing in a business always includes some element of risk. Even so, a good VC will only take educated risks. The ideal VC will use both metrics and an understanding of the industry to help them determine which risks are worth taking. Someone who can take calculated risks is a good partner to have by your side when you’re venturing into the business world.
Most startup founders prefer to fund their startups independently. Be that as it may, sometimes you need a great investor to support your startup as you try to build a successful brand. However, in order to attract a good investor, you need a good PR strategy for your brand.
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