I sat down to coffee and dessert with one of my founders recently. At the end, he tried to pay the tab.

I had to explain to him what might be the most important rule of investing…

Never Let a Founder Pay

If you’re taking a founder out to coffee, lunch, you name it…always pay the bill.

Founders bust their butts for us. It’s the least we can do.

This goes for founders you’ve invested in and even those you haven’t. Don’t forget, many startup founders are barely scraping by financially.

One of the best early stage VC’s told me this rule:

“A founder remembers everything you ever did for them. Every drink you bought, every lunch tab you paid. Even when they’re running a billion dollar company.”

Be Classy When a Company Fails

The founder I was having coffee with had just sold his company. It wasn’t a huge success — we basically just got our money back.

He was afraid I’d be upset. Quite the contrary — I was delighted to have my capital returned!

Unfortunately, some investors lash out when a company doesn’t become a big success. One sent him an angry e-mail when the company was acquired at a modest price.

Folks, never, ever do this.

No one feels worse than the founder if he failed. There’s no need to pile on.

If you’re investing in startups, you signed up to take losses.

Take your lumps like an adult. And don’t forget to thank the founder for all the hard work they put in.

When a company fails, you see an investor’s true colors.

It’s easy to be nice when everything’s going well. But when times are tough, the knives come out.

Keep Confidential Info Confidential

As an investor, you’ll be exposed to tons of confidential information. It’s your job to keep that information confidential.

No company wants its most critical information blabbed all over town.

Never share anything that’s not public information unless the founder gave you permission. This includes the deck, deal memo, P&L, or even the fact that the company exists.

Pretend you’re in the CIA. It’s on a need-to-know basis.

If you want to introduce them to another investor, ask for permission to share the deck. If the founder gives you the okay, it’s fine to share it with investors you trust.

And in terms of sharing public information, the more the better!

Give your founders some love online. Like and retweet their posts.

It helps them find more customers!

Wrap-Up

We investors are in a privileged position. We get to sit all day in judgement of some of the most innovative companies in the world.

Let’s be classy while we do it. Keep private information private, don’t whine if a company fails, and pick up the check.

As top angel Jason Calacanis says, “dealflow is destiny.” And your dealflow depends entirely on your reputation.

If you follow these do’s and don’ts, you’ll be well on your way to building a great reputation as an investor.

What’s the worst investor behavior you’ve seen? Leave a comment and let us know!

This is the last blog until Monday, November 27th. I’m heading to Porto, Portugal on vacation!

If you’re going to be in town, let me know!

Have a wonderful Veteran’s Day and Thanksgiving, and I’ll see you on the 27th!

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