

What are some warning signs to look for when dealing with VC firms? - wave
http://www.quora.com/What-are-some-warning-signs-to-look-for-when-dealing-with-VC-firms-and-Individual-Investors/answer/Shervin-Talieh?srid=upo

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Udo
Most of the points in the highest-rated answer are just about basic behavior
that cannot only be seen in VC meetings, but really any type of business
meeting or relationship. Stalling tactics, false representation, polite blow-
offs - it helps to recognize those in order to prevent wasting time, but I
wouldn't call them warning signs because they are mainly patterns that occur
when dealing with people who have no intention of getting involved with you in
the first place. Those are not the most dangerous.

I'd consider true warning signs more crucial when it comes to reading people's
intentions if they _do_ want to get into a business relationship that may
later turn out to be disadvantageous or otherwise a bad match.

The major warning sign in this context would be obvious personality
mismatches. If you sense that your VC (or
partner/consultant/angel/customer/whatever) cannot be trusted. People that are
quick to spout negative opinions about your colleagues or the guys who sat at
their table before you came along, be suspicious. Beware people who tend to
exaggerate or have a thing where they tell you outrageous and unverifiable
stories. Take into account that a VC doesn't just give you money, they should
be valuable resources where important feedback and referral to connections
come from. Beware of young MBA-types who don't know anything about your
industry. Take into consideration that you have to "live" with these people
and that they can ruin you if they turn out to be malicious, incompetent or
insane.

~~~
PakG1
>> Beware people who tend to exaggerate or have a thing where they tell you
outrageous and unverifiable stories.

10x this. Some investors with whom I had developed some strong relationships
in the past were very secretive and never would give names or verifiable
details as to deals they had done in the past; they were very cloak and
dagger, which I suppose was partly why they were so interesting. They were
insanely intelligent, so I had immense respect for them and considered one guy
in particular a mentor. As I worked with him, turned out he had a lot of
issues, verified by other people who mutually knew him. Those issues enabled
me to see a side of him that caused me to lose all respect.

I felt a lot like a character in a Robert Ludlum novel, who described the way
the CIA treated him. I can't write the exact quote, but it was something like,
"Obfuscation, generalization, and manipulation. They give you enough details
to help lead you to conclusions, but never anything concrete. Then when you
finally come to the wrong conclusions and take incorrect actions, they say
it's your fault because they never told you that in the first place and you're
hung out to dry."

Truly good investors are happy to talk verifiable details as to what they've
done. They have nothing to hide and are proud of their integrity, track
record, mistakes, failures, and successes.

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trotsky
What is typically going on when a firm is "just fishing"? Passing information
to a portfolio company in the same niche? Looking for market sizing or other
research data? Checking out the type of companies/people the competition is
passing on or interested in? Trying to make the senior partners think that
they're busy? Any/all of the above?

~~~
stalieh
Yes. All of the above. It's sick.

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iujyhfgtrtgyhju
You start to think they are on your side....

Remember VCs are like the guy who wants to play pool for money in a bar -
right after he loses the first couple of games.

Except of course for the pool hustlers basic honesty....

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bluethunder
Classic Indian VC Behaviour:

"If you get a call from a VC analyst, saying "we just learned about you
through...and think you fit well with our firm...would like to schedule an
investor presentation..." This will go nowhere. The analyst is boning up on
info, and they will suck your brain dry. They have no intentions of
investing."

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ojbyrne
The most prominent thing about this article (the top answer actually) is "I'm
a hustler baby" Not actually assuming a gangster persona is a huge step
forwards in terms of dealing with VCs.

Dave McClure being the exception, of course (on both sides of the deal).

~~~
stalieh
My homage to Biggie not withstanding, vc's are people, just like hackers,
entrepreneurs, marketing folks, etc. Just trying to keep this shit real.

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divtxt
Haha as expected - like the joke about politicians lying that goes "when their
lips are moving".

