I have been reading this great blog “Both Sides of the Table” by Mark Suster, a 2x entrepreneur who, in his own words “has gone to the Dark Side of VC”.
I like his blog, because he’s working hard to build real understanding between investors and entrepreneurs. The better both can understand each other, the easier it is to work towards the deal and beyond.
In one of his lates post “Raising Angel Money” there is a great quote by Ron Conway, the legendary angel investor from Silicon Valley (invested in Google, Twitter, Digg etc. early-stage SV success stories).
“If I invest in a company I open my Rolodex for them. I help them with business development introductions. I introduce employees. I give them credibility in the fund raising process. Let’s say the company was worth $1 million when I met them and I’ve helped them with both my Rolodex and my cash and they can now raise a round of venture capital at a valuation of $6 million. I would be hurting my own interests. A $500,000 investment at a 30% discount to a $6 million round is still priced and more than $4 million and is certainly worth much less than my investing at a $1 million pre-money where I could own 33% of the company.”
This is one important point for new entrepreneur to think about. There is real value on thing beyond money that really can make a big difference. However like funders, as an entrepreneur you should also make your own due diligence on the funders, to make sure they really can deliver what they say. I also suggest you to read the rest of the post as well.
Have you had good or bad experiences with this part of the value? Share what you have learned in comments below.
