VC Notes (Part 2 of ?)

 Busy past month -- lots of deals. Trying to jot down a few notes from the "inside" before I forget, things that are hard to really see as a student or outsider:

"Good Fundraisers" vs. "Bad Fundraisers"

We've been looking at (or working with) a few companies that have great fundraisers, and a few are less enthusiastic. There's things to like -- and be fearful -- about both.

• Good Fundraisers
• Who they are: The founders tell compelling stories that connect with investors, making you feel like the TAM they state is not only real but attainable. 
• Pros: If you invest early, you can have some confidence that (1) they can fundraise themselves out of cash burn troubles and (2) if they execute well, the next round will be marked up handsomely
• Cons: The valuations (e.g. on a revenue multiple basis) are rich, and you're essentially a momentum investor in the company. Rocket ship will go up (until it crashes).

• Bad Fundraisers
• Who they are: the founder has a hard time fundraising and/or doesn't love it. A few archetypes: a company that has been just treading water looking to raise a bridge or a new round (company problem), a technical founder who sees fundraising as a necessary evil but isn't great at it (founder problem), a founder who doesn't love fundraising so does the bare minimum to raise, potentially underpricing their raise (founder-role fit?). (There's surely more.)
• Pros: Essentially the opposite of good fundraisers. If you invest early at a "discount to fair market" (because they're a bad fundraiser) and the team executes, the next round should be up as the valuation catches up to intrinsic value. You're essentially a value investor, betting on the company and founder's abilities (as opposed to their fundraising prowess). 
• Cons: If company is doing just okay, next fundraise might be challenging. A good company could be killed early because of poor fundraising skill.

I imagine these general fundraising skills apply at all levels (i.e. both start-ups and funds) and have variations by sector. For example, a "bad fundraiser"/"deep tech" start-up combo seems okay, but a "bad fundraiser"/"B2B SaaS" combo might signal the founder will have a hard time selling and with G2M. 

Founder / Investor Relationship

A study in contrasts again:

• One seasoned founder (fourth start-up) sees the VC investor as a partner -- money is fungible, but prioritizes getting a small handful of strong investors on board. There's still negotiations, but no petty arm twisting. Philosophy is that it's better to have great partners on board, even if at a lower valuation. 
• Another (first-time) founder gives an underlying sense that money is the end goal. There's light arm twisting (if you can invest $X more, we can give you X rights that you're asking for). This can result in small "lapses" in full transparency with investors or haggling over insignificant things (like board observer rights). 

I imagine: (a) some of this is coachable, (b) some of this can only be learned over time after being burned, (c) some of this is hardwired into the founder, and (d) some of this comes from "greed" (i.e. after seeing your shares are now valued at $X million and the investor is trying to "take" $Y million from you). 

Not all investors are created equal, too. CI has the advantage of being an evergreen investor, so can invest pre-seed (say, $500K) and continue investing for the next 10 years (up to $10M in a single company). It allows us to have a more long-term approach, perhaps allowing for a tighter founder/investor relationship than other VCs in the industry.