How to “Field Dress” a Venture Capitalist By Tom Tierney

17 February 2013

“Field dressing is the process of removing the internal organs of hunted game, and is a

necessary step in preserving meat from animals harvested in the wild.”

Source: http://en.wikipedia.org/wiki/Field_dressing_(hunting)

Your “Entrepreneurial Hunt” for funding is done for your start-up. You’ve “bagged” your venture

capitalist. What can proper “field dressing” of your VC tell you about the future entrepreneur/VC

relationship?

I obviously don’t suggest an actual “field dressing” of your VC, that would be, wrong. I am suggesting a

mental exercise to examine the inner workings of venture capital. The steps to “field dress” your VC:

1. “Remove the Heart”: You’ll discover upon VC heart removal that the VC heart has limited

capacity, it is strictly tied to its “fiduciary responsibility” to their investors or limited partners.

“Love” of this investment is strictly based on company performance and potential return to

these investors. Entrepreneurs are “replaceable”.

LESSON: VC investment is an engagement not necessarily a marriage. VC fiduciary responsibility

overrides anything else and this should be considered a business relationship, not a friendship.

There is no love here.

2. “Remove the Stomach”: You may discover a weak stomach that can’t always stomach failure,

can’t always stomach adversity and won’t stomach incompetence.

LESSON: With a VC, set business expectations early on. Perform regular updates on progress of

business and agree with the VC on ongoing business measurement metrics. Plan on a “bumpy

road” (start-ups are volatile) and again, set expectations accordingly.

3. “Remove Lungs”: Large lung capacity ($) is present that can sustain business through the

“bumpy road”. But, these large lungs will expel lots of “Carbon-Dioxide” or “Company-Dilution”

over time.

LESSON: Know your business cash requirements and if follow-on funding is required attempt to

tie future funding to business-related goals and resultant “bumps” in company valuation.

Dilution is under your control, manage it like any other part of your business.

4. “Remove Brain”: Variable brain size is commonly found, some VCs create trends and markets,

some simply follow. Some VCs have “walked the walk” of the entrepreneur and some simply,

“talk the talk”. Will the VC add value to your business or just “$”?

LESSON: You must do your “due diligence” on perspective VCs. Check the VCs “grey matter”

prior to relationship: when problems inevitably surface with business you want a partner with

some wisdom in your market.

Although I’m picking on VCs here (it’s always VC “hunting season” after all!), all these lessons are

applicable to venture capitalists, angel investors or even friends and family, from which you may

fundraise your start-up investment.

Know the “internal workings” or your investing source and maintain a relationship that works for both

entrepreneur and investor.

Tom Tierney lives in Encinitas, CA and is a member of Tech Coast Angels (www.techcoastangels.com).

Also see http://en.wikipedia.org/wiki/Tech_coast_angels for more background information on the TCA.