VCs Think of Themselves as Mentors

It is well recognized by both academics and practitioners that there are three keys to early stage company success:

1. Pick the right market opportunity
2. Mentoring
3. Access to capital

Through a tweet today from @vcwatch I found a very interesting survey by Dow Jones Venture Source---A Study of Venture-backed Company Boards. The slides are here. The most interesting slides are 22-29, but if you are not familiar with venture capital read all the slides.

Based on the survey, venture capitalists see their value to their early stage companies (ranked by the percentage of respondents) as follows:

1. Network of contacts
2. Mentoring
3. Follow on financing
4. Exit strategy

Remember the VCs already confirmed the market opportunity (in their mind) when they made the initial investment.

Early stage entrepreneurs backed by VCs see the value of the VCs as follows:

1. Network of contacts
2. Follow on financing (tied with 1.)
3. Exit strategy
4. Mentoring

Maybe if the entrepreneurs saw more value in mentoring 7 out of 10 VC investments would not be a total write off. One could always argue if the VCs were better mentors, they would have fewer write offs. I am inclined to think that the entrepreneurs are typically at fault in the mentoring relationship given my 30+ years of dealing with entrepreneurs, my thousands of hours spent with entrepreneurship students and my clients over the last five years, but I could be wrong ;)

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Miami, FL