news breaking late yesterday afternoon about Foursquare's closing a $20 million Series B round, it's not surprising that many investor blogs from last night through this morning were updated with posts offering their individual takes the deal. Was it a good investment? Was it a wise move for Foursquare? What next?With
Ben Horowitz wrote a post aptly titled "Why Andreessen Horowitz Invested in Foursquare." Horowitz lists the following reasons behind his firm's investment in the location-based network: a great founder, a killer product, a gigantic market.
Weigh Decisions Carefully
Fred Wilson took issue with some of the criticisms about what may have seemed like indecision or missteps on Foursquare's part throughout what was a closely followed round of investment and acquisition inquiries. Wilson too praises the deliberation on the part of Foursquare founders.
The moral of the story, Wilson writes, "is don't let conventional wisdom force you into making decisions you don't need to make and you aren't ready to make, particularly about very big decisions that you will be living with the rest of your life.
Develop Relationships with Investors Early
First Round Capital Entrepreneur in Residence Charlie O'Donnell wrote a longer piece, less about the specifics of the Foursquare investment and more about lessons entrepreneurs can learn from it. Titled "Multiple Passes at the Target," O'Donnell points to the importance of entrepreneurs and investors building a relationship over time, noted in the case of Foursquare with some of the offers and and declines from Andreessen Horowitz before yesterday's funding.
O'Donnell urges entrepreneurs to let go of the notion that they only get "one shot" to win over an investors. Instead of waiting to interact til it's time to pitch, O'Donnell advises "never pass up an opportunity to have a 'way too early' conversation with an investor."
Investors have an information advantage, says O'Donnell, and this knowledge on markets, competitors, lessons learned, and funding in general, can be invaluable. By establishing a relationship early, investors will see progress:
"It's hard to show progress in one meeting, but if I meet with you when you have something super early that breaks all the time, and then 3 months later when you've sured up the product, struck a biz dev deal, and bolstered the feature set--after you told me that's what you were going to do--that's going to get a big check mark on execution. Of course, that's different than trying to come in 3 weeks later with just one more customer if my initial concern was executing a sales plan in a market with hundreds of thousands of potential customers. That's the same story all over again."
O'Donnell does distinguish between meeting early and actually pitching early. Using the common dating analogy, he does admit it can be a "very fine line between what's just being friendly and what is a clear pursuit." Emailing wireframes for some casual feedback is one thing, sending a PowerPoint deck? "Pitchy."
High praise came from many of the investor blogs about Foursquare's founding team, and many of them remarked on the progress that the company had made. Being able to observe the company's development over time and being able to testify with some certainly to the vision and follow-through of the founding team does support the argument that O'Donnell makes in his post: that it's worth developing a relationship over time between entrepreneur and investor.