A Tale of VC Added Value

I had an entertaining conversation at Web 2.0 with the CEO of a well-known venture-backed company. While he has marquee investors, one of the investors is even more marquee than the others (if that makes any sense), but has a reputation for being a little nutty. We got talking about VC added value, and about the latter investor’s reputation for simply tossing stuff over the transom at high velocity and calling that “being helpful”.

“Yeah,” he said, “sort of like when the guy met the COO of A Big and Well-Known Company {BigCo) recently, and he sent me a note saying, ‘I just met the COO of BigCo, and you should call him. BigCo might be a buyer.’

“Why, I wondered might BigCo be a buyer. They weren’t in our core market. Had the venture guy qualified them? Had he explained what we do to BigCo? Had the BigCo guy asked about us? Nope, it was typical : The venture guy had simply met the COO of BigCo and now figured he should pimp him in passing to portfolio companies.”

How common is this sort of thing? Very common. Too many venture guys do virtually zero heavy-lifting when it comes to qualifying the people they toss at already stressed and over-worked portfolio company CEOs. “Here, talk to this guy, maybe you guys could have an alliance … here, talk, to this guy, he’s with a big company that I met recently.” It’s closer to spam than real added value.

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  3. VCs on Boards of Public Companies
  4. Sequoia Does Stealth Distribution of Google Stock
  5. The Perils of Venture Syndicates