One of the early investors in my company Vungle, was Ben Narasin, a highly-regarded early-stage investor who focuses on emerging technologies and fast-growing new markets. He is a Venture Partner at New Enterprise Associates (NEA), one of the world’s largest and most active venture capital firms, and he agreed to sit down with me to discuss venture capital and what it requires.
It’s Not Just About The Money
Ben talked a lot about how, as an investor, it’s important you provide added value to your entrepreneurs. This dynamic of ‘added value’ sets up another potential advantage for an institutional seed investor and that is, access and an invitation for the next round. He showed that institutional seed investors have an advantage over individual investors in that they may be able to offer more to entrepreneurs than the individual investor can. For Ben and his company NEA, that added value is access to expertise and experience. “There are people at NEA that get proprietary deal flow because one was the CTO of SUN, while another was the CTO of SGI. They’ve had phenomenal results, and they’ve been around for such a long time. They have really tight-knit relationships with people that have done phenomenal things.“
When working with entrepreneurs, finding ways to stand out is becoming more and more important. Ben explained, “These days, entrepreneurs have enough coaches, whether it’s me as one of their early investors, or you as somebody that they know (even as a friend) that’s gone through the process to get the inside scoop.” So investors need to bring more to the table than just money. Thinking back on my own experiences with Vungle, I have found this to be true. In our very broad seed round, we had 20 to 30 investors, but of all of those, there were definitely some investors who stood out more than others.
Those are the investors that will be included in the next round; as Ben said, “you lean into the people that helped you.” That’s why it’s important to bring as much energy and non-monetary value as you can.
What You Are Willing To Give
Ben also explained that it’s not just about being available to your entrepreneurs, saying, “I would argue it’s less about how much time you give them and more about what you are willing to give them time for.” Sometimes, those sacrifices can be quite big. That led into him telling a story about the above-and-beyond assistance he provided for one of his founders who was in the middle of raising a round. They are in the mobile space and really wanted to be on stage at Mobile World Congress, the biggest mobile conference in the world. This was a big ask, as the show was a week away, but Ben was able to secure them a spot. By then, they could not break away for the conference but asked if Ben would attend on their behalf. He described his reaction this way: “I was like, Wait. What? I’m not the guy running this company. I’m not one of the founders.” And [the entrepreneur] said, “Well, we’ve got all these things with the fundraising, and we really can’t go, but it seems like a great opportunity. Would you go for us?” And so, I thought about it, and my answer was, ‘Yes.’ Now, in order for that answer to be ‘yes,’ I had to wipe out a week’s worth of appointments, figure out how to get to Barcelona a couple of days before the biggest trade show that exists there, and find a place to stay. I had to beg a room from my friend. I slept on somebody’s couch, and of course, I had to pitch their business.… By the way, I pitched and won the competition.”
Should Your Time Investment Be Commensurate With Your Financial Investment?
At one point, I posed the theory that time and attention should be focused on largest investments but asked what he thought about that. In addition, I asked Ben’s perspective on being a ‘little fish’ in a big pond. I said, “A lot of people are worried about having certain VCs involved because you’re tiny to those VCs and they’ll ignore you. What are your thoughts on that?”
While he understood the logic of focusing on your largest investments only, he explained that in reality, it doesn’t really work that way. “The amount of time is variable based on how many of your entrepreneurs need your help.” He said that he will always help where he is needed, regardless of the dollar investment. He explained, “One day, I sat down somewhere and said, ‘You know what? It doesn’t matter how big the check is. An investor is an investor. It’s binary. A dollar, a million dollars, a hundred million dollars–if I’m an investor in that company, I am an equity holder and a participant. I am an investor, and I will treat them all that way. I will immediately forget how much money I put in.’ In fact, it’s not uncommon for me to forget how much money I put in…. I decided to take all of my pride and all of my time and focus it on the companies I chose to invest in, irrespective of the dollar amount.” It became very clear in the conversation that helping entrepreneurs is for him, just plain fun, and that’s why he invests his time as well as money: “I have a lot of empathy for entrepreneurs, and if I can help them get through what I would consider a business personal crisis, then I want to do so. I want to help more to give them new ways of thinking….I feel incredibly empathetic to anybody that’s going to dedicate their life to be an entrepreneur [especially] if I’ve then gone so far as to choose to fund them.”
Interacting with Entrepreneurs and What Type of Help Investors Can/Should Provide
We talked about how to manage interactions with entrepreneurs when you are an investor. Every investor has his/her own rules about how often they want to meet. Ben’s personal rule is that he wants to meet with the entrepreneur at least one time per quarter. He’s willing to meet more often than that, but one time per quarter helps him keep in touch with how the business is going. When working with entrepreneurs, Ben makes it clear how he can be most valuable to them. He said, “What I would generally say is, ‘Look, there’s probably two primary things you’re going to lean into me for. I was an entrepreneur for 25 years. So, I’ve lived through a lot of pain. I’ve made a lot of mistakes. I can help you not make them…. the other is, I’ve spent a lot of time trying to learn this venture ecosystem and how to fundraise, and I can help you with that. And I can help you when it’s time to raise your Series A (getting you to the right people).”
That is the value that I definitely found working with Ben, and I could see how clarifying exactly how I could help would be beneficial to the relationship. At the time, I was getting calls from entrepreneurs to help with their company minutiae, which was not productive–either for me or for the entrepreneur. I shared those experiences with Ben, and he provided some perspective for that, saying, “It’s valuable to you that you went through that because I would argue that everybody that invests in an entrepreneur wants to believe they can provide value. So, let’s start at the one. A meaningful subset actually have the ability to provide value and then a subset of those actually do.” He talked about how being one of those investors who can really help the entrepreneur and follows through to actually provide that help will put you in the top 10%.
My interview with Ben covered a multitude of topics. If you’d like to read the other topics we discussed, you can read them here:
Part 1: Talking With Giants: Advice For What To Look For In A Startup from Ben Narasin
Part 3: Talking with Giants: Ben Narasin’s Perspective on Types of Investors
Part 4: Talking with Giants: How to Talk to Potential Investors with Ben Narasin
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