“Investor/Entrepreneur Value Expectation Gap”: A Postscript (Entrepreneur-Investors)

Note from Noam: Last year, 2 HBS second-year MBA students, Matthew Louie and Cali Tran, did a survey-based study of 51 entrepreneurs and 81 VCs. Part 1 was the project overview, Part 2 summarized the entrepreneur results, and Part 3 compared the VC and entrepreneur results.

Of the 81 VCs who responded to the survey, 16 had prior experience founding companies themselves. Matt and Cali decided to explore whether those 16 “entrepreneur-investor” VCs differed in their survey responses from the 65 VCs who lacked prior entrepreneurial experience. Here is a short summary of their findings.

ENTREPRENEUR-INVESTORS

Within the investor pool who responded to the survey, 16 of the 81 investors were entrepreneurs before they became venture capitalists. Extracting the entrepreneur-investor answers from the larger investor pool, a clear delineation can be observed in what they believe their role is as an investor. The entrepreneur-turned-investor has expectations of their role more closely aligned to the entrepreneur than to their non-entrepreneur investor peers.

For example, the entrepreneur-investor does not think they provide enough sales support to their portfolio companies than their pure-investor counterparts: 92% of the non-entrepreneur investors think they offer just the right about of sales support vs. 75% of the entrepreneur-investors. Attracting C-level executives is another area where entrepreneur-investors differ from their pure-investor counterpart. 12% of the non-entrepreneur investors do not think they do enough C-level recruiting vs. 25% of the entrepreneur-investor.