Tony Conrad doesn’t doubt for a second that the worlds of founders and venture capitalists are “highly symbiotic.” But it’s easier to succeed in both worlds if you’re a venture capitalist first, he says.
Conrad is speaking from his own experience, having worn both hats for the last seven years. Before Conrad cofounded the first of two companies — including the identity startup About.me, where he is CEO — he was a VC. (He’s still a VC, working as a venture partner with True Ventures in San Francisco.)
As he tells me enthusiastically over coffee near About.me’s offices in the city’s startup-studded Mission District, once he became a founder, he became a much better investor. Among other reasons why: “My ability to gain access to some of the highest quality founders was exponentially improved because they saw me as one of them.”
Conrad’s juggling act has also benefitted About.me, which sold to AOL just days after publicly launching in 2010 and was bought back by Conrad and True Ventures earlier this year. Among the biggest perks he enjoys as a CEO with continuing VC ties is sitting on several boards for True, where he’s privy to instructive conversations, including about conversion marketing metrics. Such insights “totally inform everything we do at About.me,” he says.
Given the advantages of straddling both spheres, it’s no wonder that more founders have begun dabbling in venture capital. Andy Dunn, for example, the cofounder and CEO of the venture-backed men’s clothing company Bonobos, also helps run an angel investment firm called Red Swan Ventures.
Still, Conrad suggests that the path from entrepreneur to investor is a bit trickier than the reverse path.
For example, founder-investors tend to be a little too entrepreneur-friendly at times. (Conrad notes that when True Ventures makes an initial investment, typically in the range of $1.25 million, it expects 20 percent ownership in exchange. Founders without extensive investing experience often ask for far less equity, even when writing similar-size checks.)
Pointing to individuals like LinkedIn founder Reid Hoffman and Workday co-CEO Aneel Bhusri — both partners at Greylock Partners — Conrad says another big benefit to launching a startup as an experienced investor is not having to learn every last thing on the fly. “We already understand the nuances [around] ownership. I didn’t have to learn how to operate on a board, or [the difference between] participating preferred [shares] versus just a straight-up liquidation preference. I already know that.”
It isn’t that every VC is suited to be a strong founder, says Conrad. But the opposite is also true. “You’re seeing a lot of founders who say, ‘Oh, I’m going to go do a fund. It’s easy.’ But it’s not easy. How many of them are killing it? It’s not as easy as it looks.”
Photo courtesy of True Ventures
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