Good VC vs . Bad VC

The author gets the goods at Irwin Lodge near Crested Butte, CO on a big day.

It is remarkable that everywhere you go climbing or skiing in the world, you can find an IFMGA-certified mountain guide to take you there. It’s also a testament to the power and consistency of the IFMGA standard that certified mountain guides around the world have the same set of skills and competencies.

Arc’teryx is a leading outerwear brand from Canada that has supported mountain guides in many countries over the years. They made a video highlighting my friend, Marc Piche, the technical director of the Associate of Canadian Mountain Guides (ACMG), guiding his clients in the Bugaboos in British Columbia, and Andy Perkins, a storied British Mountain Guide (BMG), guiding his clients in Chamonix. Note the consistency in their approaches and the professionalism among these guides in two distant mountain zones.

In contrast, there is no international certification standard for venture capitalists. Anyone with a committed pool of capital and business card can call themselves one. Perhaps this is appropriate since the worst thing that can happen is that you lose all the money. In mountain guiding, someone could die.

In a small town like Boulder, it’s pretty easy for entrepreneurs to differentiate among VCs: the bad ones disappear quickly and the good ones last a long time. But in Silicon Valley, there’s just too much volume to decide who is likely to be a good guide for a new company. So after observing VC behavior as a practitioner for many years, here’s my cheat sheet:

Good Venture Capitalist

  • Forms authentic relationships

  • Is happy to lead an investment

  • Introduces you to new customers

  • Closes on the signed term sheet

  • Four to six board meetings a year

  • Pings you once a week with an email

  • Introduces you to your new CFO

  • Invites you to lunch for a reason, and pays for it

  • Wants to hear all the news, good and bad

  • Carefully makes commitments, and sticks by them

  • Finds new deals through a large network of authentic relationships and a deep understanding of technology markets

  • Talks about your company at every opportunity

  • Doesn’t seem that busy

Bad Venture Capitalist

  • Forms transactional relationships

  • Waits around for other VCs to lead an investment

  • Calls your customer references

  • Begins negotiating once a term sheet is signed

  • Twelve board meetings a year

  • Emails, texts and calls you every day

  • Orders a full audit of your startup from a big four

  • Invites you to lunch for no reason, you pay

  • Hates bad news and lets you know it

  • Never does what he says he’s going to do

  • Finds new deals by chasing after what other VCs are investing in

  • Talks about himself at every opportunity

  • Too busy to do anything

The mountains are a dangerous place. Clients deserve a guide that the IFMGA standard represents. Experienced entrepreneurs deserve no less.

James Dudley