VCs Are Not Like Your Parents

Once in a blue moon an entrepreneur will try to play partners at a venture firm against each other – much like a child plays his mom against his dad.

The strategy used by a child is as follows. The child will ask his mom if he can have a candy bar. If he is told ‘no’, he asks his dad. The hope is that the second request will be approved. If mom said ‘no’ and dad said ‘yes’ the child can try to create controversy with the hopes of ultimately getting his treat.

The common parenting wisdom suggests that parents always offer the same answer, either ‘yes’ or ‘no’; they should act in concert. Partners at a venture fund also follow this wisdom. You should assume that whatever response you get from one partner reflects the will of the entire firm.

In fact, it is rare that the response you receive is not the collective decision of the firm. One of the most valuable aspects of a partnership is that it allows VCs with different viewpoints to talk through many of the difficult decisions they confront. As a result, VCs spend a lot of time talking about companies with their partners. However, even in the less common case where a VC acts autonomously, the partnership will likely support that viewpoint. As a result, you should always assume that each VC has the whole firm behind him.

Trying to play one partner against each other, or trying to talk to several partners independently is a bad strategy. Here are a few reasons why:

1. It doesn’t work. Partners frequently have casual conversations about their deals throughout the week and most firms review a pipeline document every Monday at their partner meeting. As a result, they will uncover your tactics very early in the process.
2. When they figure it out it will make you look bad, as this tactic is both naive and a bit underhanded.

Ultimately, it’s always best to be honest and open with VCs so that they feel that you can be trusted as a partner going forward.

This column was provided by Mark Davis. Mark is the author of Get Venture, a column designed to help entrepreneurs raise venture capital. In addition to his column, Mark is active in the venture community as an entrepreneur, advisor and venture capitalist. He currently works at DFJ Gotham Ventures, a leading early-stage IT venture capital fund based in NYC. Mark earned his B.A. in Economics with a minor in History at Duke University and is pursuing his MBA at Columbia Business School, where he is the Early Stage President of the Private Equity and Venture Capital Club and the Founder of the Columbia Venture Community .