Locking Horns With Founders

When Founders and Investors Do Not See Eye to Eye.

The image of two stags locking their horns, pushing and pulling each other in conflict, has been referenced when an investor and a founder come to a disagreement by a colleague of mine, Romi Dillion of Sonoran Fund.

I think it is a really great visualization because it indeed feels like locking horns. It’s an unrelenting brute force, along with dizziness and lack of orientation.

I hear the term “founder-friendly” and “hands-off” about a happy and productive VC/Founder relationship. Maybe this type of relationship is expected in an investing strategy that comes to expect zeros. Or perhaps it is a way to make yourself more appealing to founders by way of marketing.

Most of my investments have not been in typical VC fund vehicles. As a result, I make fewer bets and lean in harder to make companies work. This is beneficial to the founder as I don’t have fund lifecycle dynamics such as pressure around exits or raising additional capital.

I would absolutely love the opportunity to be hands-off and friendly with every deal I fund, but unfortunately, this only lends itself to times when the companies are doing great. When the company goes sideways, sometimes difficult conversations need to be had. Hope and friendliness are not strategies.

My friend and belt looper Jerry Pence from Balanced Capital Partners believes in a humanistic approach to the founder/CEO and investor relationship. It doesn’t matter if you are a majority or minority stake. Being able to have authentic conversations, good or bad, is the foundation of a good relationship. He says the “hard stuff” is the “soft stuff.”

Over the years, I have had spectacular relationships with founders that have had their ups and downs. There have been heated conversations as well as laughs and camaraderie, apologies, and reconciliations. This is a people business. And with people, there are always emotions.