Bijan@Spark is writing again and I’ve enjoyed his return to blogging. One recent post, “Consensus driven,” covered Spark’s decision making process for making an investment. One often hears stories that the VC investments which were ultimately the most valuable for a fund were also the most contentious. That is, some partners wanted to do the deal and others didn’t.
Bijan emphasizes that while this might be true of some funds, they instead rely on consensus. Spark has always struck me as a collaborative and well-functioning partnership, but they’re also a sizable team, and I’d always assumed consensus at this scale would create slow, risk averse decisions (which they obviously aren’t).
If I could ask Bijan a follow-up question, which I guess I’m doing here, it would be: does consensus mean that each partner has to independently agree that, if given the chance, they would do the deal, or does it mean, the partnership has to all agree that the sponsoring partner should do the deal?
[Update: Bijan responded]
At Homebrew we also work by consensus because there’s just two of us and we want founders to know they’re taking money from the fund, not Hunter or Satya (even though one of us leans in post-investment as the point person). Additionally, consensus means either one of us would do the deal on our own, not just that the other person should do it. Early on I conjectured that we should do an investment Satya proposed, even if I didn’t think the company itself was as special as he did. He stopped the conversation and said, “no, that’s not how we’re going to work. I appreciate the trust but you need to have conviction too.” This has worked well for us thus far but we certainly keep an eye on our occasional disagreements and try to understand if that’s a sign of a bad investment or just a risky one.
As a founder you should understand your VC’s decision making process, both for navigating the pre-investment phase and also for understanding how the partnership overall feels about your prospects. Don’t necessarily equate “we didn’t all agree” with lack of ongoing support. Some funds can debate vigorously upfront but once an investment is made, pledge 100% support to a founder regardless of how many “Yes” or “No” votes were cast at the decision point.
It all kinda reminds me of that classic Donnie Brasco scene where Pacino tells Depp about the difference between being a ‘friend of mine’ (that means you’re a connected guy) versus a ‘friend of ours’ (which means you’re a made guy, and thus really in the inner circle).