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5 signs that you've found a good VC, from a founder that became an investor5 signs that you've found a good VC, from a founder that became an investor5 signs that you've found a good VC, from a founder that became an investor

5 signs that you've found a good VC, from a founder that became an investor

Jimena Pardo, co-founder of the car-sharing app Carrot, is now a partner at ALLVP. The venture capital firm manages over US$ 350 M and invested in names like Cornershop

Jimena Pardo began her journey as a startup founder when she had a chat with the venture capital fund ALLVP. The conversation went so well that she decided to become an entrepreneur – and push back for eternity the MBA she already had gotten into.

She traded the academics for a crash course in tech entrepreneurship, being the co-founder of the car-sharing app Carrot. That was a decade ago, when Mexico's startup ecosystem was nothing like it is today.

Just a couple of months ago, Jimena became a partner at – yeah, you guessed it – ALLVP. The Mexican firm manages over US$ 350 M and invested in more than 40 companies. One of the portfolio's highlights is the grocery app Cornershop, sold to Uber.

Jimena's now taking everything she learned as a tech entrepreneur to the venture capital world – and with a lot of respect for startup creators, because she's been there, done that. What are some good signs that you've also found a founder-friendly VC? Jimena shares below some of her green flags, pointed out during her chat in the Latitud Podcast.

1. The VC shares your passion

What actually happened ten years ago? Jimena got to chat not only with Federico Antoni, a partner at ALLVP, but also with her soon-to-be cofounder Diego Solorzano. Then, she fell in love with the idea of a car-sharing app.

"The traffic problem is huge, and it's actually a problem for all of LatAm's biggest cities. Imagine that, to the regular citizen, it takes them three hours to get from their house to their work and then back from work to their house. And imagine giving them back those three hours of the day so that they can be with their families, work even better, or work out. This can have a huge impact on their lives."

That does sound inspiring, but the startup still needed a down-to-earth check to get the idea to the streets. ALLVP wrote its first check ever, and Carrot launched in 2012. Your investor should do what ALLVP did for Jimena way back: share the wallet because they shared the passion.

ALLVP's thesis is simple to imagine, but hard to execute: support the startups solving the hardest problems in Spanish-speaking Latin America. Carrot fitted like a glove. 

"You need to be passionate about what you're doing on both sides of the table. That is one key thing that I've learned", says Jimena. 

That's the only way to keep going on the entrepreneurial journey and on the venture investing journey as well. Both are high-risk, high-reward challenges. Money should not the only reason to take part in them.

2. The VC focuses on your solution's adoption

Passion might be your and your investor's starting point. But what will get your startup to grow is people actually using your solution. It's a good sign if the investor is asking you about your product or service adoption and how you're tracking it, even in you're just starting out. 

"Adoption is everything for a business. It doesn't matter how many businesses you convince or how many customers you acquire. You need to have real product adoption, and real product adoption metrics, in order to be sustainable in the long run", says Jimena.

3. The VC surrounds itself with other great people

You can be a startup founder building your team or choosing an investor. Or you can be an investor building your startup portfolio. In both cases, the people you surround yourself with is essential to help you succeed in your endeavors.

"Try to get as many quality people, and people you like, as possible", Jimena recommends. You're spending a lot of time with your cofounders, your recruits, and, yes, your investors. The deal between a founder and a VC could last more than a marriage

If your investor is one of these great people, and can connect you with others in the same category, that's a green flag right there.

4. The VC has empathy with founders

Since we're talking about the relationship between entrepreneurs and VCs, other important trait to look for in your partner is empathy

The journey of a founder is hard, stressful, and lonely. So startup creators are always looking for people that might be one or two steps ahead in their own journey and give them some advice – or just a shoulder to cry on.

VCs that are founder-friendly are a huge green flag. Not sure if the investor you're talking to fits the bill? Here are some questions to ask yourself:

  • Does the investor try to view things as a founder would, instead of imposing their vision?
  • Does the investor give advice with a sound reasoning behind it, taking other founders' journeys in consideration, or does it seem like he pulls this advice from thin air?
  • Does the investor try to understand what's behind each concept you present in your pitch? Does he seem interested in how you think?
  • Does the investor look for ambition, but also if you have the necessary foundation to make this dream possible? (Remember: passion and product adoption make a successful combo.)
  • Finally: does the investor present founder-friendly terms? (See how you can avoid diluting your equity too much and eventually losing skin in the startup game.)

5. The VC gives you a quick and valuable yes or no

A good investor is not the one that always gives you a yes. Sometimes, all you need to hear is a "come back later". But no matter the outcome, a quality that every investor should have is giving founders a quick response, and providing value while doing it.

"As a founder, I know how important it is to get the answer as soon as possible. Like, yes, we can follow on, or I'm sorry, we did not find enough conviction to follow on", says Jimena. 

From the founders' perspective, it's clear to see why fast responses matter. You have a lot of things to take care of in your startup, and fundraising takes your time away from it. The sooner you can move on and focus on making your startup be successful, the better.

Giving a clear-cut answer is a difficult thing to do for VCs, though. Investors always want to keep their optionality. The temptation to say "not right now, keep us posted" is strong, because nobody knows how the startup will perform in the future, given another market momentum. 

Jimena uses discipline and authenticity as weapons against FOMO. "There's a lot of your intuition, but you have reasons for why you did not participate, right? I'm being completely transparent on it because it's about respect. We try to give value to each entrepreneur from the first meeting, so share why we are not following on", says Jimena.

Maybe there wasn't a fit between your startup and what the fund is investing in. Maybe the investor was skeptical about something. Maybe you missed something in the deck that would have made the difference. Maybe you need to show product adoption or be planning your seed or series A round.

The important thing is that you get to know what happened. That way, you will be stronger the next time or for other VCs – and might finally seal the deal.

Stay tuned

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