Why are certain VCs loved by founders and others loathed?
It’s a question that is key not just to founders seeking capital, but also VCs who are looking to burnish their reputations and build the track record that will get them into the next hot deal.
For businesses with actual customers, it’s common to assess their enthusiasm for the product or service by conducting an NPS survey. The idea of a “Net Promoter Score” is to not just see who is satisfied with their transaction, but also to see to what degree a customer is likely to tell their friends and others about the experience. A high NPS toward 100 indicates that the vast majority of customers loved the experience and are enthusiastic about sharing the word. A score toward -100 would indicate that people hated their experience, and will likely spread their tale of woe with others.
Founders are in some ways the customers of VCs, and thus, they have NPS scores as well. Let’s just say it right away: not every VC reaches the same heights of enthusiasm, and there are a couple of key reasons why.
Over the past month, I have been wading through more than 1,200 founder recommendations for the launch of The TechCrunch List this past Tuesday (since then, we’ve gotten another 600 recommendations). It’s great to see so many founders recommend VCs who have been ambitious and led rounds or first checks into their startups.
As I read through more and more recommendations though, it became clear that some investors are just loved by founders. In fact, it was so distinctive that I put together a list of some of these unusually successful VCs.
Our entire recommendation process is “positive” in the sense that people are submitting endorsements. There are no negative reviews — if you don’t like a particular investor or had a bad experience with one, you just don’t leave an endorsement (or maybe complain about it on Twitter instead).
What’s clear though in the data is that there is a wide spectrum of positive sentiment for different investors. Some VCs received relatively milquetoast recommendations, while others quite literally get pages of evidence submitted by founders who can’t stop talking about why one of their investors is just amazing.
And while it is hard to prove causality, the sense I get connecting the recommendations to the successes of these investors is that the VCs with some of the highest “Founder NPS” scores also happen to be among the most successful venture capitalists in the world. Interestingly, some of the founders who submitted multi-page recs also happen to run unicorns with dizzying valuations.
So what do these recommendations say about what drives a Founder NPS score?
First, the most common description for those investors who had the best positive sentiment was definitely responsiveness. Founders repeatedly noted the speed at which certain investors responded to emails, texts, and phone calls, including everything from a cold email pitch, to requests for feedback, to help with a problem post-funding, and everything in between.
There is some research evidence that response time on email can determine the sense of trust in a relationship. That’s important, but I think there is something deeper here. For founders, particularly early-stage founders who are just setting out on their journeys, building a company is downright frightening. No one is responsive when you are just starting out. Customers don’t respond quickly, potential engineering candidates might not respond for days or weeks, investors and the press often just outright ignore email pitches (sorry!).
So it is a huge breath of fresh air to work with someone — anyone — where you know that they are going to be there for you, that you have this backup that’s a guarantee. And given the power that a single investor has over the destiny of a startup, responsiveness from a very important person in your professional life just helps relieve so many of the stresses of building a company.
Next, the most common pattern for the top Founder NPS VCs was what I would summarize as “solutions oriented” (it’s precisely the kind of poetic phrase that I hope to have on my tombstone someday). Founders talked incessantly about VCs who helped them close engineering candidates, connect them to their networks of product builders, business strategists, and idea generators, and help them work through challenges they confronted in building their startups.
What’s notable is that not a single founder recommendation seemed to describe this work in terms of the total time a VC put in. I never once saw a line that said “My VC was great, they always put in 5 hours a week to help us with our business!” Instead, founders constantly described situations where their first or lead check investor solved a key problem that was blocking them from moving their companies forward.
That’s important, because I think one of the barriers for a lot of VCs to improve their Founder NPS scores is that they “lack time.” But the evidence is clear: founders don’t crave raw time per se (they themselves often don’t have bandwidth to just hang out with their VCs as well!), but rather an intense focus on solutions. In much the way that responsiveness helps founders feel secure in a very stressful context, constantly working toward solutions helps founders learn the ropes about how to close those candidates, figure out that strategy, and design that product. After a while, they tend to leave their investors alone.
Lastly, a common trend that I saw with a lot of the best VCs was that they were specific, at all stages of the relationship. Founders in their recommendations regularly talked about VCs they had interacted with who asked in-depth questions during their pitch that really got to the core of their businesses and weren’t the kind of general “How do you think about product?” questions that these thoughtful builders loathe.
Even after the pitch though, a number of founders noted that they enjoyed how precise and specific their investors were about performance and how to assess themselves as leaders. Much like with responsiveness, the specifics helps to frame a very ambiguous situation into a more measurable and ultimately understandable problem.
Interestingly, some of the top investors were also lauded for asking tough (but specific!) questions. Founders who have successfully raised venture capital are certainly a selective group, and maybe they want negative feedback more than founders who aren’t as successful fundraising. Nonetheless, earning a high Founder NPS doesn’t just mean constantly giving a founder a thumbs up or a pat on the back. Instead, founders — particularly the most ambitious founders — crave data and ideas to improve their businesses.
If you collectively add this all up — responsive, solutions oriented, and specific — what you get are the qualities of … a great founder. Indeed, what was striking about the top investors was just how much their modus operandi was identical to founders: moving fast, getting stuff done, solving challenges rapidly, and keeping their eye on the prize so to speak.
That formula isn’t brilliance. Yet, the wide disparity in the perception of different investors makes it clear that many investors in the industry still have a lot of work to do to be competitive in the startup world. Ultimately, the key with an NPS is that the customer tells their friends. When founders love their investors, they are going to introduce their founder friends to those investors first. And thus locks in the comparative advantage that some investors seem to hold in the marketplace.
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