The truth about investors who win competitive deals in venture capital

Many of our portfolio companies have raised money recently and many of those deals have been very competitive. I’ve found pretty obvious who were going to win each of these deals and here are the patterns that I have observed:

Investors are all the same unless…

In very competitive deals, unless one of the bidders shoots for the stars, everyone reaches the moon. The conditions are basically all the same at the end. However, a lot of entrepreneurs will tell venture capitalists that they went for the best offer. Truth to be told, two things happen:

  • Either none of the investors succeeded in standing out from the crowd. In that case, entrepreneurs go with the best offer / best VC.

  • Or one of the investors stood out and in that case, entrepreneurs try to push this investor toward the best offer and then go with him/her.

What are you waiting for…

Either way, you understand that the best way to win a deal, especially a competitive one, is to stand out, not to shoot bold & first. Few hints on how to do so:

  • Your future depends on the past. If your portfolio shines, if your entrepreneurs respect and admire you, make them talk about you.

  • Entrepreneurs need you. You know they are profoundly alone facing many challenges. You must pass more time with them in real life, and not on the fuckin’ phone. I find too many investors staying in their office, passing calls to the entrepreneurs while they should be out there sharing a meal or a drink with them.

  • Entrepreneurs must respect you. Stop sharing every single idea you have in mind, be more analytical, put your network at work. The best investors don’t talk much. They share what they know for sure. They ask simple questions. They provide honest, straight and simple feedbacks. They are not cowboys, they are gentlemen.

I hope those few hints will help you reconsider how to build a better relationship with the entrepreneurs you want to work with.