Venture Geek

For the second time in a week Fred Wilson is my blogging muse. Today he posted on the Union Square Ventures site/blog a post about traction. But, I’m not hear to tell you about traction. Here’s the part that caught my eye:

We are happy to talk to entrepreneurs long before they launch. In fact we spend more time doing that than pretty much anything else these days. We want to be able to watch a team take an idea from concept to execution. We learn so much from being able to do that.

This illustrates one of the bits of advice I find myself giving over and over again to the various entrepreneurs I come in contact with. I find many first-time entrepreneurs want to wait until they’re “ready” before talking with potential investors. They fear that if they go too early they won’t seem worthy of investment. But, then on the flip side you’ll hear venture folks say over and over again that they like to see or hear of a company several times before investing — it’s really a very human reaction when you think about it. Here’s the thing — if you go talk to potential investors early, they can then watch you make progress and get to know you as you go through the early stages of pulling things together. Given how difficult it is as first-time entrepreneur to convince professional investors that you are worthy, this period can be the key to building credibility with investors because they get to watch you in action. If you wait until you’re “ready” it often means you’ve hit some kind of plateau in your development and are now spending most of your energy on raising money — and then over the weeks you’re doing that you aren’t making a lot of progress. In many ways, that makes it HARDER not easier to get credit in the eyes of the investors for all of the hard work you’ve put in over the preceding weeks and months.

Now, this doesn’t mean you want to call every VC firm the minute you get your first idea, and it doesn’t mean you should call them every day to let them know how many lines of code got written. But, it does mean that having some preliminary conversations (and couching them as such) with investors interested in your particular market/technology/approach is a great way to get to know people over time and to demontrate just how much progress you can make (”Wow, look at all the progress she can make without my money, I wonder how much ass this team would kick after I put my money in?” is the kind of reaction you’re seeking). This leads to the related piece of advice I also often give, which is that the most common mistake first-time entrepreneurs make is being overly secretive about their idea, but that’s another post for another time…