Inside the mind: Relationships and Venture Capital

Posted by Brightspark on Feb 14, 2017

In many ways, building a business is like building a wild and exciting relationship. There are ups and downs, twists and turns, and strangely, some adventures that take you in directions you never expected—in the startup community, we call those pivots.
However, the end goal is to find a partner you can stick with through the tough times and that’s where stability factors into the equation. Finding someone who builds with you over the years in a give and take relationship is a rare and difficult thing to achieve, but when you do, it’s worth it. For a VC, matching with the right CEO is like finding an ideal romantic partner in life.

I was curious to know more about the similarities between VC/CEO and personal relationships, so I sat down with Sophie Forest–who has been managing Brightspark for 20+ years–to dive deeper into the idea.

The Top Qualities of Desired Partners

Sophie says that there a number of factors to consider when selecting a good business partner, especially when looking at CEOs to invest in. Sometimes, it’s their drive, intelligence or confidence, but often there’s chemistry right from the first pitch meeting! Beyond the team, it’s also important to fall in love with the company itself.

We looked at a variety of lifestyle articles, from Thought Catalog to Project Smart, to see if similar themes came up. They did; citing confidence, ambition and honesty as important traits. To top it off, an interesting poll re-published on Reuters reported that 56% of Americans believe in love at first sight—also known as spark or chemistry. Sometimes, you just need to trust your gut!

Making a Great First Impression

As a VC, you often have your pick from a great number of suitors, but where do you find the real cream of the crop? As it turns out, it’s not so much about where you meet, but about how those first few meetings go down. Are you able to dazzle Sophie with your knowledge of the industry? Can you communicate confidence in your product? Do you have the je-ne-sais-quoi that indicates that the rollercoaster ride will be a fun one, regardless of all the ups-and-downs along the way?As fellow tech entrepreneur and academic Vivek Wadhwa would say: 

“The truth is that entrepreneurship is more like a rollercoaster than a cruise.” - Vivek Wadhwa

Unsurprisingly, we find many common themes in relationships, both professional and personal. Psychology Today reports that first impressions present an immense importance in building lasting-relationships. Despite the popular notion that “opposites attract”, it’s in these first meetings that people will look for similarities.

My takeaway? If you’re looking to connect with a VC with over 25 years of experience, come prepared to shine. She’s got high standards! 

A Relationship that Ages like a Fine Wine

Sophie explains that maturing partnerships tend to develop a deeper level of trust that is hard to replicate with younger relationships. As a Partner gets to know a CEO, and vice-versa, they become more open with one another and are more comfortable sharing updates (even the bad ones!). The frantic calls where fears, worries, achievements, or anything else, come up become the norm, and that’s expected!

Of course, this also translates over to personal relationships. Here are Elite Daily’s signs that your relationship is maturing. Some elements were so accurate we thought they might have based the article on a VC partnership! Here are the highlights:

  • Discussing the future isn’t scary because there’s trust
  • Your partner balances you out and calls out your weaknesses
  • There can be disagreements, but never on fundamental things

Don’t Go to Sleep Angry

We asked Sophie for her top tip to avoid going to sleep angry with a portfolio CEO and I felt like she nailed it. Here’s what she had to say:

We think this is key advice for relationships of all kinds. Communication is always rated one of the top success factors for any kind of relationship. On the opposite end, it is also the number one cause of failure according to an article by HuffPost. Cause number two? Inability to resolve conflict.

Who’s the Driver in this Partnership?

It takes two to tango!

Everyone in the partnership brings their own expertise to the table and Sophie says that if she agrees to work with a company, it’s because they’re amazing in their own right. If there’s one person driving the relationship, it means that the other is lacking—and that’s a big red flag!

Knowing the Long-Term Growth Strategy

Venture Capitalists and entrepreneurs aren’t immune to the honeymoon phase. There’s nothing more exciting than finding a partner who shares your vision and wants to build toward the same future. Some of these milestones include closing a next round of funding, hiring a new team member or closing a large customer. However, where there are ups, there are downs. Of course, it’s always easier to manage things when they’re going well, but how about when they’re not?

Some of the toughest things to get through, according to Sophie, are disagreements on vision and future. She says when it gets to this point, it’s usually the beginning of the end. A very insightful Medium post by Steve Blank highlights key insights into both parties. Despite the commitment to one another, it’s important to recognize that each party needs to focus on their primary goals for success. Like in any long-term relationship, holding one another back from achieving those goals never ends well.

Essentials for a Successful Partnership

Here are Sophie’s top 5 traits for a successful and lasting relationship with between a VC/CEO.

  • Communicate and share the good, the bad and the ugly
  • Respect everyone’s role and space
  • Trust that all partners are working in the best interest of all
  • Have fun building together! It’s really difficult, so you also need to have lots of fun!
  • Availability is essential! Partners need to be available whether things are going well or not.

Sophie definitely helped me better understand the dynamics of a VC/CEO relationship. The most surprising thing, for me, was to see how relatable the whole experience was. When a VC becomes interested in seeing how a company grows, and takes on an active role, then the partnership closely resembles a long-term relationship. It requires a strong foundation of trust that continues building over time with open communication. And, most importantly, it never forgets the importance of enjoying the journey together.

For all the love birds enjoying Valentine’s Day, I’d say that’s a pretty good takeaway.

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