Matt Blumberg, the founder and CEO of Return Path, wrote an interesting post today on the ten characteristics of great investors, in response to Fred Wilson’s post on the ten characteristics of great entrepreneurs. A quick recap:
- Great investors know how to give strategic advice without being in the operating weeds of a company
- Great investors get to know whole management teams, not just CEOs — in fact, great investors become part of the extended management team of their portfolio companies
- Great investors invite you to do diligence on them by giving you a list of every CEO they’ve ever worked with and asking you to pick the ones you want to talk to
- Great investors ask great questions
- Great investors don’t publicly take credit for the success of their investments, even if they were major drivers of that success
- Great investors show up for meetings on time and don’t spend the meeting using their smartphone
- Great investors treat their portfolio companies’ money as if it were their own money when spending it on things like lawyers or travel
- Great investors look for connections to make between their portfolio companies or relevant people but have a strong relevance filter and don’t send junk
- Great investors never have a ready-made list of the ways they add value to companies — and they specifically never talk about the help they give in recruiting executives or making sales/bus dev introductions
- Great investors recognize when they have a conflict around a portfolio company and are clear to represent their separate points of view separately
These are good rules of thumb for investors. I’d add five more:
- Great investors provide great insight and market intelligence their companies otherwise wouldn’t have
- Great investors provide their entrepreneurs with shortcuts – these are things the companies could have done or reached on their own, but the investor makes it that much it easier
- Great investors know when to push and when to coddle, even when the entrepreneur feels neither at the time is necessary
- Great investors are hyper focused on building valuable companies, not just good companies
- Great investors help their companies stay financed through their lifecycle
