How to scare off bad actors in the startup ecosystem
Alright dammit, something needs to be said. I am so sick of all the bad actors out there. I’m sick of hearing about them. I’m sick of meeting them. I’m sick of their mere existence. They have a million names: Pretenders, wannabes, fakers, takers, wantrepreneurs, pink hats, bandwagonners, succubi, sycophants, vampire squid...
You know who I’m talking about if, like me, you’ve spent the past year or more agonizing…bleeding, sweating, tearing into the embryo of a company that you think has a chance to one day rule the world.
You know who I’m talking about if you’ve finally reached some semblance of traction, raised some money, or become profitable and are gearing up for the trek to the next peak.
You know who I’m talking about if you’ve mortgaged your life and relationships, lost inordinate amounts of sleep, and worried yourself sick about any million number of things on an hourly basis for as long as you can remember. All for the sake of crashing your vision through every wall that stands before you, any glass ceiling that someone has placed above your head.
Those hard-to-kill little cockroaches that scurry around your startup ecosystem at meetups and on Twitter wiggling their antennae, grappling on to anything that carries them further into the scene. They want to be your co-founder. They want to be your advisor. They want your equity, your cash, a spot on your webpage, a title on their LinkedIn. They are “serial entrepreneurs.” They have “tons of experience,” “oodles of wisdom to impart,” are “consummately impactful,” and can introduce you to “countless investors and industry vets.”
I call bullshit.
For the newly initiated, here is what they look like, and some tips on how to avoid them:
Consultants/service providers disguised as investors
Typically, these are people trying to reinvent themselves. They’ve had some success. They have a mortgage that they can’t afford any more in the suburbs. They describe themselves as angels. But all they really do is string you along in hopes of taking an equity stake or charging you consulting fees if you happen to come into some money down the line.
LinkedIn titles: Angel investor/lawyer/consultant
Where they hunt: Meetups, hackathons, dinners, conferences, incubators
How to scare them off: Ask them who they’ve invested in during the past 12 months.
They offer to introduce you to investors, sales prospects, or some luminary in your field. They name-drop. Maybe they worked at a venture fund during the dot-com boom or ran sales at some long-dead company in Wichita. Either way, they’ll promise some intros as bait, and then pull a switch with a suggested nominal fee structure after a nice dinner at the local steak joint. So much for pay-it-forward.
LinkedIn titles: Whatever their last position was two years ago, which oddly enough still says “until present.”
Where they hunt: Usually virtually via an email intro from some friend of a friend.
How to scare them off: Tell them that you have no more equity to give out in your current option pool, and that you’re out of cash in 30 days.
VCs doing diligence for another investment
There are actually two types of this breed. One VC knows he doesn’t have any money left to invest in his current fund, and hasn’t been able to raise another one (but still wants to get some “G2” on your offering for the sake of helping out another portfolio client.) The other VC has money, but is doing diligence on your company only to fund a competitor two days after they get all the information they need.
LinkedIn titles: VC; [Note: Don’t be enamored just because their profile says “Venture Capitalist,” as they’ll soon be out of a job, joining category #2 above.]
Where they hunt: AngelList, cold emails
How to scare them off: Ask them a) Where are they in their fund cycle? b) Are they looking at or have they already invested in a competitive company?
Self-described “serial entrepreneurs”
These are a less harmful (directly) than the others, as they typically prey on brand new ecosystemers. But they’re nefarious nonetheless. They give founders a bad name. They haven’t entrepreneured anything, but claim to be successful and give advice to the unknowing as if they were Steve Jobs incarnate. Some even try to get fees for connections made, or find their way onto advisory boards of young companies. I’ve seen some dupe well-known incubators and startup accelerators alike.
LinkedIn titles: CEO, founder of God-knows-what
Where they hunt: Meetups, conferences, Twitter, online forums
How to scare them off: These type could survive a nuclear winter. They’re the cockroaches of our ecosystem. Just do your due diligence. Find out what they’ve actually done. Remember, owning a bunch of Web domains does not an entrepreneur make.
Watch out for all of these critters. They’re all over the place.
[Image via dvdverdict]