Seed Capital From Angel Investors: Eric Paley, Managing Partner, Founder Collective (Part 7)

By guest author Irina Patterson

Eric: It is amazing how much investors can damage a company. And I think the first thing an investor needs to do is not damage a company. Investors to be really careful to help the management team stay focused, be responsive and helpful, but not be demanding in ways that are really not productive for the company. I think that is number one.

And then for Founder Collective, we would like to be an entrepreneur’s best sounding board. We really believe that we are partners with them in building their business.

And we would like to be their first phone call in terms of anything in the business. Not because of the obligation or because that is a phone call they have to make to report to us, but because they respect us enough that they believe we are valuable.

And that should happen organically, not because they feel an obligation, but again, we would like to be their best sounding board. And if we are doing that and we are their first phone call, to me that is the sign we are doing our job.

The third thing is we look for other spots; perhaps right business developing opportunities to support the companies. Or hires –we are very proud of every introduction to a company that leads to a successful hire, which there have been a good number of so far. This is something we take a lot of pride in, looking for spots to help the company in ways that are on the critical path for that company.

Irina: Is it difficult to find the right people to complete the team?

Eric: Always. People recruitment, talent management, building teams are I think the single biggest variables of success or failure. And it is always a challenge to find the right people to help enable the company’s success.

Irina: Do you prefer that they stay in one location?

Eric: I am a big believer that especially in the early stage you can build the companies virtually, but, boy, it is a lot harder. It is a lot harder to iterate. It is a lot harder to share ideas. It is a lot harder to create a naturally healthy, positive culture. It is a lot harder for people to advocate for what they believe when they are in totally different places.

Anybody who spends a lot of days in multiperson conference calls knows that it is very hard to communicate your points very clearly and follow the points of everyone else. All the key attributes of a good contributor, team member, or manager become far more challenging.

It is very hard to do those kind of things. I am a big believer that particularly in the early stage there is enormous value in the management team’s being together. There are many reasons for exceptions. We are not completely allergic to multiple locations, but it is strongly our preference to see the team in one place.

Irina: What are you personal daily challenges as an investor in early stage companies?

Eric: For me the challenge is keeping up. I want to be as responsive as possible to everybody because that’s what is fun for me and that’s what makes me passionate about what I am doing. I love helping entrepreneurs, supporting a company’s entrepreneurial spirit.

And it is hard, being as responsive as I want to be and keeping up with everybody. We put our priority on our portfolio companies. I think we do a really good job at that and obviously don’t do as good of a job on companies that we don’t invest in, but we try as hard as we can to help entrepreneurs. We are a tiny fund with very strong deal flow, and managing it is a daily challenge for us.

Irina: Is there anything that could help?

Eric: No. I think it is a hands-on activity and I think the people who try to delegate a lot of it, well, I don’t think that works very well. We try to be very hands-on. Our job is to keep up. I have some personal coping strategies, but I don’t think there is any silver bullet.

Irina: Thank you, Eric. It’s been a very insightful conversation. I’ve learned a lot.

This segment is part 7 in the series : Seed Capital From Angel Investors: Eric Paley, Managing Partner, Founder Collective
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