Be Nice Or Leave (Term Sheet From Hell)

Came across this great blog post by Fred Wilson.

I have found that reputation is the magnet that brings opportunities to you time and time again. I have found that being nice builds your reputation. I have found that leaving money on the table, and being generous, pays dividends.

Doing right by people is important no matter what field you’re in, but particularly in the startup space if you’re in it for the long haul, you need to take care of your stakeholders. Applies to both entrepreneurs and investors. At 8 Capita when we are making an investment decision, one of the most important considerations is whether we feel the entrepreneur(s) we are dealing with knows how to take care of his investors. A couple of months ago I received a Term Sheet From Hell from an entrepreneur that, amongst other things, included a call option for the founder (founder has the option to buy back shares from investor if things are going well) and the reimbursement of founder’s previous expenses in starting the company (which essentially means founder has zero skin in the game). Needless to say we passed on that investment, but more importantly it is a character-revealing term sheet that precluded any future engagements with the entrepreneur.

Investors are not all angels either. There are a couple of investors I avoid because of what I’ve heard about them from other investors/entrepreneurs. If I was a people person I probably would have tried interacting with these guys and make my own decision about them, but I’m not naturally sociable so it doesn’t make sense for me to spend what little time I have engaging with folks of dubious character. Which goes back to Fred Wilson’s point – being nice builds reputation, and reputation brings opportunities.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s