Naval · February 4th, 2011
The venture industry works on the premise that investors are generalists and entrepreneurs are specialists. VCs are good at being, well, VCs, and the entrepreneurs have to be really good at whatever specific task they set out to do.
This isn’t by choice—ask an entrepreneur what they’re looking for in an investor and they won’t say things like “advice, corporate governance, recruiting.” Entrepreneurs would prefer someone who has specific connections, interest, and knowledge about the market they’re attacking and the technology they’re building.
The problem is that it’s very, very difficult to find VCs by sector and expertise. The new markets feature on AngelList solves that problem. For example, a smartphone baby monitoring company joined AngelList. They wanted to meet investors with who had expertise in Analytics, Babies, Consumer Electronics, Parenting, and Mobile. A music startup joined AngelList and wanted to know which investors still love the music market (and which hate it).
Now you can go find your specialist investor. The one who can really add value. Try the search box or browse.
Topics AngelList
AngelList really is brilliant, finding targeted investors should in theory save entrepreneurs lots of time. Why pitch investors that have no interest in your product or market right. Love it Naval!
Sure won’t miss those presentations where I feel like the polka band someone mistakenly booked between Metallica and Anthrax.
Thanx for the categories.
great post, i agree. the era of the generalist VC is over; the community of entrepreneurs can provide a founder with most of the horizontal skills and knowledge. a VC needs to know his/her shit in a given lane, and not be an asshole.
could be relevant to mention that the opposite of a specialist is not a generalist, but an integrator.
i think VCs are clearly specialists even if they don’t specialize on a small niche like parenting…
VCs specialize in deals.
interestingly nobody is focusing on integration: no approaches, no ideas, no methodologies, etc..
the consequences of the lack of integration between management teams and boards, entrepreneurs and VCs and in a bunch of other areas are all too clear for everybody involved.
Things you (should) get out of a professional investor –
They won’t try to renegotiate terms after they’ve given you a term sheet.
They have money to do follow-on rounds, if necessary.
If things go bad they’ll be familiar with the whole ‘pay to play’ concept.
If the CEO goes rogue they’ll know better than to just believe everything he says.
And yes, they can bring you specific industry connections and help with recruiting, but those are less important than the above.
The problem with stereotypes is that they act as filters of what we are capable of. There are some angles (sorry VCs) that actually like to code/work biz and really know a lot of details. That’s why I think Angels have an edge right now. Life experiences trump raw cash sometimes.