Thinking About Thinking

The Magic Words

Posted in Venture Capital by larrycheng on January 5, 2010

I heard the magic words yesterday from a couple of my portfolio company executives that just warms my heart as an investor and board member.  Those magic words are: “I want to invest in the company.”  In a prior post, Founder Liquidity, I wrote about how founders/executives not selling shares when they have the opportunity is a big vote of confidence in the company.  But, an even greater vote of confidence is when founders and executives want to invest their own capital into the business.  I love it when a senior exec steps up and breaks out the checkbook ready to write a check.  I’m trying to think if there’s any gesture that gives me more confidence in a business, and it’s hard to think of one.  That’s the kind of alignment and confidence I like to see. 

As I think about my own portfolio, about 2/3 of the companies have taken some form of debt or equity investment from someone(s) on the founding or senior executive team.  While you don’t have want to have too many individual shareholders, key execs writing meaningful checks is a good thing in my book.

3 Responses

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  1. Sie Tien said, on January 8, 2010 at 12:12 am

    Hello Larry,

    I work in the philanthropic field and while it is very different from your work – there are many similarities. There are best practices that both worlds can learn from. In the non-profit world, what warms my heart is to see staff financially contributing to the non-profit they work at. The idea is the same – if you believe in it – you will personally support it.

    Keep the posts flowing….

    • larrycheng said, on January 8, 2010 at 11:46 pm

      I can see that Sie. Makes sense. It wouldn’t have occurred to me that non-profit employees contribute to their own non-profit, but that makes sense now that you mention it.

  2. A. Karno said, on January 13, 2010 at 12:54 am

    I have come so close to hearing those magic words… the hedging, the salivating, the
    loose change rattling in the suit pocket…it’s always like coinus interruptus.
    But 2010 has a nice ring to it. It’s our year.

    love the posts.

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