Alex Algard Blog

My prior post, A Cheer and Gentle Kick in the Rear for Seattle VCs, was about why I’m so bullish on the potential of the Seattle tech community and what we need more of from early-stage VCs (and we don’t need more capital here; for example, Founder’s Co-op is a tiny fund that is making a big impact). The VCs set the tone for everyone else in Seattle, and therefore it’s incumbent on them to work at least as diligently as everyone else to help us catch up to the Bay Area. It’s well within our reach.

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Now I’d like to share why Seattle deserves better from one VC, as far as their role as a steward for our start-up community. The following anecdotes about a local VC convinced me that at least a few members of this firm have been shirking their responsibility to entrepreneurs in Seattle. Let’s just call them “xyz VC”. I wouldn’t care if it was a tiny fund, but this is a significant one that holds the keys to us all truly maximizing our potential. I’ve kept my thoughts private until now (obviously there is some potential downside for me personally), but after the fourth anecdote below, I just couldn’t hold back anymore. Hopefully, this will make them act up for the benefit of both themselves and the rest of our community. And I am hopeful, because there is amazing talent within the firm, and they can do so much.

• I gave an educational talk to first-time entrepreneurs at Startup Day 2009 about the full, and often overlooked, impact of VC liquidation preferences. The VCs need to hit their IRRs which is tough, but it’s equally tough when first-time entrepreneurs don’t understand the term sheet, and this event was targeted at first-time entrepreneurs. So in preparation, I did some fact-checking with a local law firm and a well-known investor, in order to make sure that I got the facts down right for my presentation. After my presentation, a partner from “xyz VC” came up to me, flustered, and said, “You’re spreading lies to these entrepreneurs. You’re telling them that they might end up losing over half of their company when we’re only investing for a much smaller stake.” Yeah, that’s right and that’s usually what happens.
• A few months ago, I attended a small, exclusive lunch reception for a special guest visiting Seattle. The guest was an individual with considerable influence in the Bay Area, who was interested in forging stronger ties with the Seattle tech community. This time another partner from “xyz VC” showed up, but 20 minutes late, disrupting the lunch discussion with the excuse, “Sorry, but I had to deal with some dead goldfish at home.” He said nothing else during the lunch, and then he left equally abruptly while some were still finishing their entrees with the line, “I gotta go. I have to take my kids to see the G.I. Joe movie.” And he was not joking either. Not cool.
• For the WhitePages investment round a few years ago, our investment bank Savvian, set up a roadshow with 27 institutional investors out of 28 that they reached out to. Mysteriously one of the firms, the very same “xyz VC”, did not return phone calls. Savvian said they’d never experienced this before, and we finally gave up on the firm. Several weeks later, when we were almost done with our fund raising process, one of our executives ran into a member of “xyz VC” at a kids soccer game, and he was told, “Wow, the WhitePages deal sounds interesting. We should talk to you.” Too late… (NOT significant to me personally, but just another supporting data point.)
• A super-star entrepreneur I know recently tried to set up a meeting with a partner at “xyz VC”. This entrepreneur’s track record is so stellar that he should get through the doors of just about any national VC without even a business plan to pitch. The partner re-scheduled the meeting on him four times. After three months had elapsed since the original email exchange, he was still “working with the partner’s assistant” to set up the meeting. I was incredulous when I heard this, so my friend actually forwarded the email trail to me. Gosh, it’s quite the email trail for a simple meeting. If this is the welcome mat for a superstar whom they actually want to meet, what is the welcome mat for mere mortal entrepreneurs? Come on folks… This guy can build a whole business in three months.

On a brighter note, there is a new generation of VC standouts in Seattle who work hard, conduct themselves according to high standards, and are a significant value-add to our community. I am hopeful that all of the people at “xyz VC” will rise to that same level as good stewards of VC capital and meet their responsibility in contributing to a thriving tech community in Seattle. I know that they can do it, and I know that it will make a big positive impact to Seattle.