Sunday, June 17, 2007

"No offense, but you are an 'Analyst'."

Given the main objective of my job as an Analyst is to source deals, I speak to literally more than a thousand companies a year. In some ways, this makes me and any other Analysts/Associates out there a great “front-line” barometer for the venture climate. Moreover, I'll venture that the reaction a General Partner gets from an entrepreneur will be a little rosier than the view someone like myself gets.

So when over the course of just a couple of weeks I get a reaction twice that I've gotten only once before, it gives me pause. The reaction?:

"Please don't take this the wrong way, but you are an 'Analyst.' If your firm was really interested in [MyCorp], a Partner would have contacted me. Meeting with non-Partners is just not a good use of my time." [This is verbatim.]

Is this reaction a telling commentary on the start-up friendly period we find ourselves in? Or should I just re-read Guy's VCAT and remember my place? ;)

From my perspective, there are several factors that perpetuate this mindset:

  • We now have well established and easily accessible “waterholes” (i.e., the likes of TechCrunch). With one fell swoop, everyone knows about a company. The web, I would venture to say, is actually super-saturated with websites whose sole focus is to review web startups. There are literally dozens of blogs with TechCrunch-esque models. Hot consumer internet companies don't stay secrets (and uncompetitive deals) for long. Unsurprisingly, perhaps, consumer-internet VCs are increasingly bringing in EIRs to incubate web companies.

  • Likewise, many companies seem to assume that once they’ve been mentioned in one of these blogs, all VC firms know of their existence. The lack of an immediate inbound call from a Managing Partners is tantamount to a lack of interest from the firm.
  • It's not just with consumer internet deals. I can't tell you how many enterprise software companies I've called who tell me that they get daily calls from VCs. VCs overall are becoming more proactive when it comes to generating deal flow. This proactiveness has two flavors: either individuals in the firm becoming more proactive (including partners), or the firm adding a level of employees who are there to be proactive. Many firms have hybrids of these flavors, but it is rare to find a firm that has not adopted one stance or the other.

In this world of in-bound interest, I can't blame entrepreneurs for their reaction. Why go through resume submission / first-round interviews when other firms let them skip right to final round interviews?

But instead of thinking about an inbound call from a junior person as a waste of time, entrepreneurs should think of the call as a great opportunity to get the person's firm excited about their company. Junior people have the ear of the senior people in their firms - otherwise, they wouldn't be there. Entrepreneurs who realize this often have a powerpoint deck always updated and at hand, ready to email out or WebEx at a moment's notice. These entrepreneurs have figured out how to efficiently and effectively play the game. And when they are ready to go out and raise a round, my guess is that they'll have a long list of VCs (junior and senior) waiting to hear from them.


Erik said...

Some people...

Can an analyst/associate say yes to an investment? No they can't. They don't even get to vote.

But they can say no. They can tell the partner the founding team is made up of bozos. They can torpedo you in any number of ways.

Rather than thinking of analyst/associates as investors I like to think of them as the last person in an introduction chain. They are trusted colleagues of the partners. They have the ear of the partners.

Anonymous said...

What I have heard is more often than not "Analysts" are people who confuse activity with progress towards the goal. So they try to fill up their days with meetings back to back with really no purpose, except to show they are busy.

Its nothing against analysts, but most entrepreneurs are busy people also and would rather not waste time pitching someone that is just fishing for appointments.

Unknown said...

Erik, Thank you for the comment. I think that's a good way to think about Analysts/Associates, although I think there are different gradients to "trusted." (i.e., I think Analysts/Associates are a degree closer than an intro from someone outside the firm.)


Thank you also for the comment. I can understand where you are coming from, but I think it is important to note that there are, broadly, two kinds of Analysts / Analyst Programs. There are those that think that the job is just a numbers game. Because that is the perceived strategy of the program, those Analysts easily confuse busy with purpose. Then, there are those Analysts / Analyst Programs that believe that sourcing is not quantity by quality. At Bessemer, we strive to be part of the second group. This is driven significantly by Bessemer's roadmap philosophy. Whereas Analysts in other programs might sandwich a call with a consumer internet company between calls with a mattress company and a restaurant franchise, we rarely call companies in spaces that we have not already identified as interesting. And because of this, we are usually smarter about which companies we reach out to. I think this helps us be more effective with our time, and try our best not to waste the time of the busy entrepreneurs with whom we speak.

Thanks again for the comments,

Harsh Shah said...

Thanks for the insight into the struggles one faces as an analyst.

Re: Contempt

Did you catch this on ValleyWag?

Unknown said...

Hey Harsh,

Thanks for the comment! Nice to hear from you.

Just to clarify - I wasn't feeling bad for myself/ourselves at all. 99.5% of CEOs I speak to are gracious and open to conversation. What I wondered outloud was whether there is anything to learn from that small 0.05%.

And I did catch that link you mentioned from Valleywag. Thanks for mentioning it. To say the least, I got a kick out of it.

Mike Levin said...

I'm so new to this game, and am flattered each time someone from a VC operation gives me the time of day. The time I met you at the Red Herring Union League event in NYC, I noticed a related effect: companies working the VCs like sharks, basically blowing off anyone who wasn't with a VC firm they recognized (a particular person).

Last week, I was at the iBreakfast's Web 2.0 NY event and noticed the exact same person doing the exact same thing. Now, I know that if you're trying to raise money, some people can obviously help you, and some people are unlikely to be able to do so. But to project that blowing-you-off attitude so freely can only result in acquiring a bozo reputation that's bound to catch up with them.

Unknown said...

At the risk of sounding like a broken record....

Mike, Thank you for your comment! I appreciate your perspective. Hope things at HitTail are going well...


Anonymous said...

You're so much nicer to your commenters than I am... personal responses, wow. :)

I always felt like an entrepreneur who acts this way towards analysts probably acts this way towards the incremental individual user and to partners and to just about everyone else in their life, in some fashion, and isn't the kind of person we wanted to invest in.

Ken Berger said...

Next time someone tells you that, respond, "well you are an anal-fist!"

Even thinking the statement he made, let alone conveying it to you, exposes a complete lack of judgment on several key levels that is never going to result in success.