Thread by @KieranSnyder

1 VCs and early-stage founders/operators (or people who were once early-stage founders/operators), this is a thread for you.

This is about the “value-add services” that VCs try to differentiate themselves by offering to their portfolios. Thread >>

2 When we were early stage, we had investors who offered these services. These were 100% of time consulting services: on-call recruiting, sales, or marketing “experts." (I’ve seen “tech experts” as a value-add service too; we didn’t work with any of those.)

3 This model is common for seed- and A-stage portfolios. The idea (I think) is that founders don’t have seasoned operating teams and lack essential skills to build their companies, so “experts” come in to “help.”

4 This is generally a well-intentioned model. Founders, especially 1st time founders, have the experience that they have. Speaking for myself, there were a lot of areas outside product and engineering where I needed early help.

5 However, the help I needed was not “expert advice.” It was either 1. A person to do the actual work, or 2. Software so I could do the actual work. In fact “expert advice” typically felt expensive to take and not usually worth the time or exposure cost.

6 A recruiter to give me advice on how to think about hiring is not as valuable as a recruiter actually doing the hiring. A marketer to give me advice about how to write something is not as good as a person or software that actually writes it. Etc.

7 In the worst cases, the “experts” felt like they were part of an ongoing investor diligence process rather than feeling like part of our operating team. In slightly better cases, they felt like noise to manage.

8 This is notably different from experts that we brought on as formal advisors to Textio. For instance, @Kazanjy was a massive accelerator to our early sales system progress. But he took tasks like a part-time employee, not like an ad hoc advice-giver.

9 I never thought much about this until recently until I was at an event with much earlier stage founders who were complaining about the same thing. Here are a few of the things that the group generally agreed are/would be useful “value-add services” from early VCs.

10 People generally appreciated credits/discounts/free software offerings. Cloud storage comes up a lot (we sure appreciated those early AWS credits). So does other operational software that the company needs but can’t afford yet: CRM, accounting software, recruiting software.

11 More than one person brought up “VCs who do real work.” It doesn’t matter if this is your lead investor or an operational partner at the firm.

12 There is a huge difference between someone giving you advice about the tasks that are needed vs. someone willing to take on some tasks themselves. The availability of the latter is gold, and often (not always) inversely correlated with someone's tenure in the industry.

13 The other thing that I have appreciated, and that I’ve heard other founders appreciate, is a VC who is willing to put their networks to work for their early-stage portfolios. Introductions to exec candidates, potential customers, other relevant influencers can be so valuable.

14 I've never heard anyone say they wanted operational advice, so I’m curious why so many VCs use their limited operating budgets essentially in pursuit of this quite old-fashioned model of work.

15 After all, many of the same VCs are investing in software that obsoletes the consulting service itself! Change is easier to invest in than it is to make.

16 Whether you’re a VC or a startup founder/operator, I’m curious to hear what you think about this. What services you prioritize providing, as a VC, and what services you wish your VCs prioritized providing, if you’re a founder or operator.

17 A little more on this tweetstorm, since a lot of people heard "VCs should be actual operators on the team." That is not what I meant.

18 VCs can provide:

Templates for financial models or sales deck structures

Software subscriptions that are too expensive for their seed companies

Baseline metrics from their portfolios to show you where you really are

All this stuff is way more valuable than advice.