A big part of my job is to reach out to and meet with CEOs and management teams of fast growing European technology companies. Since we are looking for later stage investments with our fund, the companies we typically engage with have already achieved a nice size of around 50-100 employees and a few millions in revenues.
Within every VC fund, an entrepreneur will occasionally decline a meeting, unless a Partner of the Fund joins. The typical message is something like “we would highly appreciate if one of your partners would join the meeting, since we are making time available to speak with your firm”. Although I understand the reasoning in the entrepreneur’s mind, I believe this shows a lack of understanding of how Venture Capital firms operate.
VC funds are small organisations, typically employing less than 10 people. An average VC fund will have 3-5 partners, 0-2 senior investment professionals (Principal, Investment Manager) 2-3 junior investment professionals (Associate, Analyst), 1-2 back office employees and maybe an intern. Partners and (possibly but not necessarily) Principals can champion an investment and write a check. Everybody else is pretty much supporting them in the investment process. Therefore (the reasoning in the entrepreneur’s mind goes) why would an entrepreneur agree to speak with someone who cannot actually write a check?
Although there are numerous reasons, the 3 most important in my view are:
- This is simply how things work. Associates are highly involved in the investment process. A VC fund hires Associates (perhaps also analysts) amongst others to identify interesting companies and take the first meetings. It is part of the job description. And the reason is quite simple; ensuring that Partners can spend quality time with a limited number of companies, only after the first filtering mechanism. An Associate would see hundreds of businesses every year. This gives a very good understanding of what the fund is looking for, the industry and how the business compares with its peers. At least in the fund I am working at, Associates are highly involved in the entire investment process, from the first day until the moment money is in the bank. Chances are that before the investment is completed, you will spend more time with them than with the Partner anyhow.
- Their opinion matters. VCs are small organisations. Every Monday, in every fund, all team members meet and discuss current opportunities. In a 5-10 member team, everyone who is an ally to your company is a significant asset, regardless of how junior he/she is. An Associate who is passionate about a deal will spend more time than the average Partner on the company and the industry and will fight hard to convince the other team members. Every entrepreneur should be seeking an enthusiastic supporter of his company in the VC meeting, even if it is the intern who joined the fund 1 month ago! Although they do not have decisive power, the opinion of an Associate highly matters in a process.
- VCs invest in people. This is the most important criterion in these investments. An entrepreneur who does not treat junior people with respect gives a bad signal of his managerial qualities.
My advice towards every entrepreneur (and advisor) is very clear. If you have a personal relationship (or a very good connection) with a Partner in a VC firm, by all means try and have a meeting with a Partner. But don’t be disappointed if you are referred to having a meeting or call with an Associate. And in any case I would strongly argue against rejecting a meeting with a junior member of a VC fund and demanding a Partner’s presence. You show a bad understanding of the VC industry, possibly lose the opportunity of an enthusiastic supporter and risk giving a bad signal on your ability to handle people.