I am on a plane to Vancouver heading for the CVCA annual conference. (No wireless access to e-mails with Air Canada so got lots of time on my hands). For those of you not familiar with the Canadian venture capital industry, CVCA stands for Canadian Venture Capital Association. Tomorrow starts their annual conference where VCs and LPs from Canada (and a few from elsewhere) get together to network and dialogue on their industry. It is always interesting to experience the exchanges and atmosphere of the event. It does change significantly depending on market conditions. This year should be pretty bubbly (not to be mistaken with bubblish) and upbeat.
VCs can be very strange and interesting beasts. They usually compete for fundraising but not always, they can collaborate if they happen to be in different niches or geographies. They usually partner for deals but not necessarily if the market is heating up and deals become rare gems or if their Fund is too big. They usually share due diligence information and market intelligence but not always if it happens to be very proprietary and part of a “hopefully” unique investment theme.
What happens when you fill a room full of venture capitalists? I know that there are lots of jokes about this; it is like filling up a room with lawyers I guess, but this is not the purpose of this note. I think it can actually be nicely compared to a typical “woman wants a man” scenario…
First, they want to show that everything is going well; they are independent, having lots of fun and completely in control. If they talk about their portfolio companies, they are getting tremendous traction, have significant interest from partners and potential investors and can’t respond quickly enough. This is the part where you want to hook the guy. This is the part where you want the other VC to be a little destabilized (the compete part) and get the desire to investigate into those portfolio companies and also spread the good news (the partner part).
Second, they want to show that they are somewhat vulnerable to spark the “save the girl” syndrome in a man. Remember King Kong??? They touch a little on their challenges; complain about fundraising and reporting and all. This is the part where you bond and get sympathy. This is the part where you create an ally for the future. This is also the part where you gather information from your partner/competitor. What is he investing in, is he doing well? Does he have a competing play to one of your portfolio companies?
Thirdly, the woman completely hooks the man in proving how sexy she is by walking off with the other guy. VCs continuously wave at numerous other parties, usually other VCs, and they sometimes throw a little intriguing note like: “are you still coming by next week, we need to talk about this opportunity we touched on last week…” or worst, walk slightly to the side and whisper something about a potential deal. This usually is enough to completely hook the previous bait even if the whispering is only about the next round of golf you are planning to play.
I know it seems a little simplistic and it is much more complicated than that in real life but is it really? In any case, flirting as a VC can be a lot of fun and in the current bull market, it is actually quite pleasant since at least 80% of what we say about our portfolio companies and our Funds is true or at least we believe it when we say it. You will probably find similar dynamics in any industry that strives to find the right balance between competing and partnering, succeeding as an industry versus succeeding as a company. Looking forward to it!