Should Founders Pitch VC Associates?

If you look through the replies and quotes you’ll notice that founders largely agree, while investors largely cast doubt.

Some of the founder grumbling is likely sour grapes, but hyper-successful founders like Brett Adcock also agreed.

This week I’m answering:

• What associates are actually responsible for

• Whether pitching associates is worth it

• What other value networking with associates can offer

Should Founders Talk to VC Associates?

What Do Associates Do?

Like most broad questions the answer is “it depends.”

Based on associates I personally know or have known, the role tends to include:

Deal Sourcing

As you’d expect, associates look for opportunities for their firm to invest in.

Each firm is unique. At some, the GPs don’t keep their ear to the ground in the zeitgeist quite as much and genuinely rely on associates to keep them informed about trends. These firms give you the best shot at getting a deal if you go through an associate.

But other firms have active GPs who maintain their own channels to get inbound from friends or other sources of warm referrals. And the deals they hear about this way tend to be more interesting to them specifically because the founder passed what Marc Andreessen calls “the first test.”

In venture the hottest deals never get shared around in the circles an associate would be likely to hear about them until the round is closed.

As a result, an associate’s deal sourcing work is better described as “networking” in most cases. A good rule of thumb is that the more often you see an associate at tech parties and founder/investor mixers, the lower the likelihood their firm will end up taking allocation if you go through them.

However, even in this case, they aren’t useless (I’ll explain why later in this piece).

Due Diligence

Someone’s got to size the market, perform blind reference calls, and see what can be learned about competitors.

Sometimes this means reaching out to competitors directly and forming a relationship with them.

Typically this is to genuinely consider investing in them instead, but bad natured firms do send associates on fishing expeditions to learn what they can without a real likelihood of investing.

The tough part for founders?

You never really know which it is.

Portco Support

Once the money’s in the bank, you might end up talking to an associate more often than your GP.

Associates get saddled with helping out with your asks, in many cases, while GPs offer strategic guidance.

When we wrapped up our Series A from a16z, we set up a WhatsApp groupchat with our GP and two partners (a16z doesn’t use the terms associate or principal) where we shared updates, discussed strategy, and made asks.

All three were highly engaged but the more junior partners took the lead on execution in most cases.

IC Meeting Prep

The GPs may be ok doing napkin math, but there’s usually an associate or two behind them cranking out a financial model, investment memo, or market map for the investment committee at the fund to consider.

This can become a large part of the job. I’ve even had associates break out their laptops to wrap up a model for their GP in the backseat of a car I was driving before.

What Happens When You Pitch an Associate?

An associate does not have the authority to write a check.

In most firms they don’t even have the authority to bring your round up with the investment committee (the group of GPs who collectively decide whether to invest in your startup or not).

In firms that also have Principals, they’re two levels below the decision makers.

This means any pitch you make to them will require you to just make the same pitch again to at least one more person than you otherwise would need to.

Here are all the ways it can fail:

1. If they don’t understand your pitch

2. If they understand, but don’t like, your pitch

3. If they do a poor job presenting the deal to a GP

An associate has less experience evaluating startups than a GP, so the first two scenarios above are more likely, and the third wouldn’t exist if you were talking directly to the GP.

Pitching an associate introduces a middleman to the process who can have a considerable impact on your success or failure.

Michael Girdley takes it one step further and says pitching an associate is a flawed concept:

You get one shot to take with each firm you talk to. First impressions matter more in venture than any other professional setting I’ve been part of.

Your best path is still to work on getting a warm intro from a mutual acquaintance the GP or, if one doesn’t exist, a founder they’ve previously invested in.

What are Associates Helpful For?

Just because associates aren’t the best path to an investment at most firms doesn’t mean they’re not worth your time.

Due to the combination of all the time they spend networking and their exposure to what GPs are thinking, associates are very useful for understanding what the fundraising climate is like.

If you have a good relationship with them and they genuinely like your startup, they can also be surprisingly useful backchannels with GPs while you’re in conversations about an investment.

It’s worth building a network of associates before you raise. Jason Lemkin understands: