What do the right investors do for you?
There's often a bit of anti-VC sentiment among the entrepreneurial community. You hear how VCs just want to smash you down, force you out, control your company.
So when the news was officially confirmed that Twitter bought Summize, I got to thinking about Tweetscan.
Tweetscan came out with their Twitter search earlier than Summize--who changed their product model. However, it was Summize that went out and took some funding ($750k) from Betaworks.
Tweetscan seems to have remained a one man show--built by David Sterry, who remarked recently that "Running a search engine is a very hardware intensive task and it's a challenge to keep it fast while providing the results people want." Tweetscan seemed more like a really interesting side project than an attempt at company building. Maybe David wasn't looking for anything more. That's fine. It was a great project, but clearly now that Summize IS Twitter Search, it will likely become the default. By the looks of the traffic, it already had:
Not only was Summize able to build a team, but they got some really thoughtful, well connected investors on board. Their investors and advisors helped them with the decision to focus on Twitter search--which was a reapplication of their technology away from generalized web sentiment. Of course, not to mention the fact that John Borthwick says specifically:
"The deal started with a conversation with Fred Wilson about how conversational search can evolve into navigation, about how important navigation becomes for UGC as you go mainstream — it concluded with the deal that was announced this morning. Betaworks is now a twitter shareholder, and excited to be one."
So, when your investor is having this kind of smart conversation with an investor in one of your likely acquirers, you're at a HUGE advantage. This isn't someone pitching your company to get flipped--this was some pretty high level thinking (and outside the valley thinking, I might add).
So while you're protecting all your equity from those big bad investors, ask yourself the question of who's having these types of conversations with key decision makers and thinkers about your company. "Who's a lot more experienced than I am that thinks intelligently about my company's strategy--and cares about it?"
THAT's the kind of investor that makes the rest of your equity worth multiples of what it is the moment they take their 20-30%.
