" Building a Healthy VC/Entrepreneur Relationship with Recursive Ventures Itamar Novick, Founder & Managing Director@ Recursive Ventures"

1. Building a Healthy VC/Entrepreneur Relationship
Itamar Novick, Founder, Recursive Ventures

2. Speaker: Itamar Novick, Founder, Recursive Ventures
15+ years in Founder & Executive Startup roles
(From Seed to IPO/Exit x2)
10+ years in Venture Capital
(Investor in 50+ companies, 6 unicorns, 2 IPOs)
12+ years in SF deeply enmeshed with the startup
community

3. Building a Healthy VC/Entrepreneur Relationship

4. How to evaluate if your company is "VC backable"?
Not every company should be VC backed (actually most shouldn’t)
Taking money from VC can lead to conflict if you don’t end up building
a “scalable startup”
Questions founders should ask before taking money from (early stage) VCs:
● If all works well can I return 20x+ or more to investors within 10 years or less?
● Is my TAM big enough (likely $5b+)?
● Is there a business dynamic that would make the business massive (winner takes it all, network
effect, significant moat around Tech/IP moat, etc.)?
● Are my co-founders and me in this for the long-haul? Can we take risks?
● Do I have a core team that can see if through from Pre-Seed to IPO?

5. How to choose the right partners for this stage of your journey?
Focus on the GP, not the firm (although the firm’s “reputation” is also important)
Understand fund lifecycle and partnership dynamics, ask hard questions
Chemistry + Backchannel anybody putting significant $$ into your company
Empathy. Prioritize people who have been in the founder shoes. Especially those who have failed before.
Seek real commitment (too many BOD seats?). Choose investors at the right stage (series A VC isn’t setup to
invest in Pre-Seed)
More investors = more champions, but more to manage. Find the right balance for you

6. Founders and VCs are on the same side of the table, until they aren’t
An entrepreneur is all in. She has 100% riding on the
company
The VC has a portfolio of investments. VCs seek very high
returns at the risk of failure of a single company
Founder and VCs are likely to cross swords at some point
Need to understand the power law in VC. VCs push
companies to go big or go home.
VC need liquidity at times that don’t necessarily make
sense for founders/employees

7. How to manage potential conflict ahead of time and set expectations in advance?
Leverage your BOD. Make them work for you, not vica-versa
Keep iterating the long term/vision when explaining short term/tactical decisions
Always under-promise and over-deliver
Have hard conversations with your investors as often as needed. Come prepared with solutions.
Embrace conflict and work around it vs. procrastinating

8. Key takeaways
Make sure your company is “VC backable” before
taking money from VCs
Pick the right VC and make sure they are value-add
Manage VCs and other investors continuously to
avoid conflict and friction