When It’s Okay for Investors to Add Zero Value

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When is it okay for an investor to add zero value? When the expectations are clear upfront.

Setting Expectations At the First Meeting

We investors love to crow about our value add. But not every investor needs to help startups.

Just be clear from the first meeting what kind of investor you are.

“You will never hear from me. If you message me, your email will go into the great beyond.”

If a founder hears that and still takes your money, they know what to expect. They know you’re just cash.

And that’s okay!

Some founders actually prefer that. They don’t want to waste time with meddlesome investors.

This is especially true for experienced founders. They don’t need much help.

Why I Try to Help Founders

Personally, I like to be involved with the startups I invest in.

It’s fun! Just wiring money and waiting is boring.

I also want to improve the odds of success for my investments. When I introduce them to VCs or retweet their posts, that can give them a little push.

From day one, I make it clear that I’m available to help anytime, day or night. I give founders my cell number and encourage them to use it.

But not every investor needs to be like me!

Money Alone Is Enough

We investors all think we have some unique value add. But let’s be honest: the main value we add is cash.

An investor’s job is to invest.

When founders contact us, they’re mostly interested in money. They may pretend otherwise to flatter us, but the truth is they need cash.

Don’t feel that you have to add additional value.

If you enjoy helping founders, by all means do so! But don’t claim you’re going to add value just to sound good.

What’s Not Okay: Broken Promises

Here’s what’s not okay: talking a big game about being helpful, then disappearing.

Unfortunately, that’s what most investors do — even of some of the biggest names.

I heard a story about one of the most famous early stage investors. I won’t say his name.

This guy can take 3 months to respond to an e-mail.

Ridiculous!

An investor like that should just be honest: “I’m not going to help you or even reply. We will never speak again. Farewell.”

Wrap-Up

“We go the extra mile for our founders!”

How many times have you heard that? How often has it turned out to be BS?

Let’s be honest, folks: the minute they wire the money, most VCs have delivered 100% of their value.

And that’s not a bad thing! But the expectations should be clear.

If you say you’re going to help, do it. And if you’re not, be honest about that.

More than any “value add,” founders need honesty.