Theresa Hajer, head of venture capital research, discusses the importance of establishing trust between a venture capital fund and an entrepreneur for a most aligned and honest partnership.
Among several perspectives featured in this article, she says, “Where there’s a limitless amount of capital, what founders want is guidance and coaching, and that can also mean being firm and taking a tough position, calling out founders where they need to, setting guidelines, but in a fair and very aligned way….You establish a trust with the founder so you can be that first call; they come to you not only with the good news but with the bad news, and if you’re a real partner you’re going to step up and work together to figure it out.”
Reputation risk is top of mind with institutional LPs, both at the venture capital firm level and the underlying portfolio company level, she adds.
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Additional insights from Hajer were included in a related article in the same issue of PEI, Venture capital special: fundraising is ‘frenzied’ (Fundraising continues apace as LP appetite for exposure to tech-related growth heats up.) Click here to read the full article.