1. The private equity guys you want to meet are not the ones who have hired a lackey to cold call your office.
2. The best private equity guys only meet with company owners with a personal connection to them. Get the advisor with weighty personal connections.
Here is a great article by Scott Kirsner explaining these two points in detail:
Bob Davoli likes to position himself as an entrepreneur who just happens to be making investments on behalf of a venture capital firm.
“Having been a CEO, I don’t want some VC calling me up every week and saying, ‘Let’s have a cup of coffee.’ So I don’t micromanage,’’ he says. His approach is to either “let the guy run the company’’ (all but one of his chief executives are guys); identify a problem and work together to fix it; “or you fire him.’’
Peter Bell, who was the founder and chief executive at StorageNetworks, sought Davoli’s advice when he became a venture capitalist.
“If the guy isn’t delivering, or you no longer support the strategy that he has laid out, you’ve probably got to replace the guy,’’ Bell recalls Davoli telling him.
Davoli says he doesn’t read trade publications or analyst reports. He doesn’t share advice or investment interests on a blog or via Twitter.
He doesn’t speak on panels or look at business plans e-mailed to Sigma. “We’re very relationship-driven,’’ he says, meaning that most of the entrepreneurs he meets are introduced to him by people he already knows.
When asked whether that strategy might mean that he’d miss the next Facebook, a company started by a young entrepreneur not already connected to the start-up scene, Davoli acknowledges that it would. “But hopefully, when the VPs from successful companies go to start their own companies, we hope they come to us,’’ he says.
At GlassHouse, chief executive Shirman says he didn’t feel pressured by Davoli to take the company public in 2007 or this year. “His position is, if the markets are hostile and the timing isn’t right, you just wait,’’ Shirman says.
Davoli is “the anti-VC VC,’’ Shirman continues. “He doesn’t have a lot of respect for VCs who aren’t independent thinkers, or who are numbers jockeys. He enjoys building and growing companies.’’
Davoli is happy to ride on his reputation; some might characterize him as tough, but he says he’s fair and that the only time he gets “really vicious’’ is when someone has lied to him.
“If you have too many bad scorecards, guess what?’’ he says. “The new entrepreneurs aren’t going to come to you for money.’’
Scott Kirsner can be reached at email@example.com.