An interesting read appeared on the Version One Ventures blog today, as well-known Canadian venture capitalist Boris Wertz listed his traits of a great investor.
Wertz is one of the most active early and mid-stage tech investors in Canada, with a portfolio of over 40 early-stage consumer internet and enterprise companies, including Edmodo, Flurry, Frank & Oak, Indiegogo, Julep, Top Hat, and Wattpad. He also cofounded the Vancouver-based startup accelerator program GrowLab. Wertz has also been extensively involved in promoting the Startup Visa program, both before its inceptions and currently.
Today he listed these traits that are central to a good investor:
Live in the future: Wertz said that once you’re living at the leading edge of a rapidly changing field, you’ll see things that are missing, like challenges or frustrations that need to be solved. “And, once these problems are solved, they’ll seem very obvious in retrospect. This same advice applies to investors as well. You can only create above-average returns if you invest in companies that are ahead of the mainstream.”
Have a well-defined investment thesis: Wertz said that investors need a strong set of convictions to serve as the foundation for making bets, and then following through on them. “For Version One, I’ve created a map of what particular areas we should focus on and where they’re going over the next few years. Then, I can evaluate each potential investment within the context of this map/thesis.”
Stick with it: strong advice that bodes well for entrepreneur or investor, here Wertz explained that Not every investment is going to be wildly successful right away, one of the toughest parts about being an investor. “If you’re going to be successful as an investor, you need to realize that once you are in, you’re in. There’s no turning back, or ignoring a flailing start-up until it just goes away. Of course, it’s much easier to stick with your guns, if you’ve made the initial investment based on your own core principles/investment thesis, rather than simply reacting to market trends and current momentum”
Be both a cheerleader and a critic: just like a teacher or someone in a position to guide, Wertz said there will be times when a startup needs an enthusiastic backer and a quick pep talk or honest, sometimes even harsh, feedback. “praise without honesty are just empty words. Yet, a constant focus on the negative won’t generate the results you want either.”
Remember who runs the company: Finally, the investor said that successful investors are usually active investors, but the exact level of participation is a delicate balance. “An investor should never cross the boundary of getting too involved. At the end of the day, the entrepreneurs run the company; the investor is an active bystander. Founders make the ultimate decisions; investors can only advise.”
Photo from the Vancouver Sun.