5 stupid mistakes VCs make

It isn’t only entrepreneurs who sabotage great business ideas by making stupid mistakes. Investors are just as guilty.

Last week at Oslo Innovation Week, we talked with Jeanne Sullivan of Starvest Partners, about the 5 stupid mistakes entrepreneurs make over and over again.

Of course, as an entrepreneur, “You have to know what to do and how to do it, to get the wallet out.” But what about the person controlling the wallet? Jeanne reminds entrepreneurs that investors are far from faultless.

Today, the tables are turned. Here are her top 5 stupid mistakes VCs make:

1. Make it hard to get a meeting

“VCs can be really ridiculous about this,” Jeanne says.  “When it’s impossible to get a meeting, an entrepreneur might just go to another investor, and an opportunity is missed.”  And furthermore…

2. Be obnoxious in a meeting
Sure, many VCs are intimidating, but they can also be snotty, condescending, and rude.  Not good for building relationships! “If you align with and get an investment from an obnoxious investor, your life will be miserable! You have to be careful, and do diligence on us,” she advises.

3. Buy in at the “wrong price”

And by the wrong price, she means,”Way too high. Way, way too high. The only way anyone makes money is if you can buy right and sell it at a multiple over it – if it’s way under, or an asset sale, we’re stupid.”

Worse, it’s demotivating for everyone. “If you are early stage and get a 15, 20 million dollar valuation, and in your institutional round you are told you’re not worth it, you do a down round, then it’s like you’re failing, you’re not successful.”

4. Poor terms for entrepreneurs

Many entrepreneurs are so motivated to get an investment, they end up with terms that might not be ideal. “Poor terms pits everyone against each other, it’s not so fun,” says Jeanne. To avoid, this, she reminds entrepreneurs to do their due diligence.  “What kind of person is this? What kind of investor? Figure it out, so you know what you’re getting.”

5. Miss a great investment opportunity

The bane of every VC.  “If you decide ‘this isn’t for us’ and then hear another firm gave a big fancy investment, you feel pretty stupid.”