Star Power Isn’t Everything

November 12th, 2013 / Comments Off on Star Power Isn’t Everything

Whenever an investor shows his or her belief in you—especially someone with star power—it provides validation and also ignites intrigue among the startup community.  It’s not just a popularity contest though. Having the backing of a top VC firm lends genuine credibility to a company. It says that a firm that knows what it’s doing and that routinely gets to choose from the pick of the litter chose you. That says a lot about where you are going.

Of course there are some sacrifices. Having a top VC firm can also mean that you agree to a smaller valuation than you might get from another investor.

When it comes to celebrity investors—whether they are big technology or media stars—the same halo applies, but is less meaningful. Helping a company become very successful is not usually a celebrity’s full-time day job, so while star support boosts interest, it doesn’t necessarily come with experience and actionable advice. Furthermore, there are many smaller VC firms that don’t have as big a brand, but that do an amazing job helping a company scale.

Overall, I am a fan of assembling the best possible talent around you. Remember, not every partner at a VC firm is equally great. Knowing which investors to pick is critical.  I recommend staying focused on choosing the people who will be fully committed to the company’s success. That is what makes an all-star team—and a winning company.


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