9 Traits of a Good VC (2024)

In my rather short career of being a founder and then an early stage investor, I was often asked the question — what defines a good VC? Putting investment returns aside, here are 9 common traits I find common in great VCs of our time.

1. Good VCs know that they are not operators. Good VCs have to trust the founders they invest in — that founders are the best operators in their field and let them run with the idea. Having said that, operating experience is very relevant in the sense that it helps build rapport and more importantly, empathy of a VC towards early stage founders and their companies.
2. Good VCs are great at championing. Bill Gurley said that venture is a service business and VCs have to be able to “sell”. In some way, good VCs are startups’ chief envanglist — their praises should help companies get more customers and get more capital resource.
3. Good VCs care (a lot) about relationships. Venture capital is never about the capital, it’s about the relationship. Don’t be fooled by the “$$$ billion AUM” — but really, dig into the essence of that particular partner that you are going to be working with for the next 5–10 years. Many underestimate how *personal* venture business could be. As it turns out, top companies usually have a strong, diverse, supportive board. And that board speaks not just from the board room, but speaks from the faith in the entrepreneurs.
4. Good VCs are great at making introductions. By nature, VCs are constantly meeting different people on various levels, every single day. A good VC has the lowest ego yet the largest network (e.g. David Hornik) — thus the opening-door ability could be powerful, especially combined with a killer product and an amazing team.
5. Good VCs are great at venture hustling. What this means is that a good investor would not be sitting back in his/her chair waiting for companies to approach him/her. Even Mike Moritz competes aggressively on deals by showing up at founders’ doors late at night with an expensive bottle of wine. Hustling shows conviction. Often times VCs talk about how founders should have conviction but most VCs act based on the herd dynamic. Pretty ironic.
6. Good VCs are great at pattern recognition. When Fred Wilson discovered Twitter, he had the ability to see things that other investors couldn’t. He then made the investment based on his conviction. More importantly, Fred Wilson has been able to articulate publicly, via his blog, twitter and conferences, on the pattern that he sees and why those are important. Founders should seek out investors who have the ability to separate signals from noises — not only it helps you sees what’s beyond the horizon but challenges you to think bigger.
7. Good VCs are great at cultivating a community. Josh Kopelman famously invented the First Round model that’s able to cultivate a genuine community around each founder in the First Round portfolio. People often think building a community is easy but that’s because they rarely built one before. It is hard. Why? A community is a reflection of a genuine part of you. That’s why many people who attempted to copy First Round’s model failed — they are no Josh Kopelman.
8. Good VCs don’t bullsh*t you. There is something about a genuine VC, especially in a venture world where investors refer companies as “deals.” Two persons come to mind, Chris Hollenbeck and Tim Chang are some of the most genuine investors that I know. They speak from their heart, for the benefit of thinking for the founders. Here is a video clip of Chris and Tim fireside chat at one of the Founders & VC meetup events.
9. Good VCs respect your time. By statistics, when pitching a VC, the odds are against you — but make sure you avoid the VCs who intentionally drag along the process. A good VC should always give you honest feedback about their interest level and the stage of the process.

Now you know what makes a good VC but it’s equally important to realize that even the best VCs are only a small part of the startup ecosystem. Startups are only a small part of the global economy. Living in the Silicon Valley echo chamber, we often think the rest of the world is also like this — everything is on demand, we pay merchants in Bitcoin, and we soon can hop on a self-driving car while enjoying a cinematic VR. While we strive to be the hottest place for technology, extending that empathy towards others, is crucial to make all of us the best.

* thanks @eliotpeper for the editorial feedback!

** read the original post at https://medium.com/@jzhaos