What big funds look for in a CEO

Recently, we got a hold of an investor letter from one of New York’s finest late stage venture funds. The letter shared insights into what the fund looks for in a management team, which resonated with us. Below we share these points, verbatim.

We like CEOs that are patient with us and believe that all questions are reasonable. CEOs that roll their eyes at questions, try to convince us that what we’re asking is not important, and then don’t have good answers are the ones we are suspect of. CEOs that demand investment decisions without answering any of our questions are ones that we’ll run from. A good management team is one that will try to understand why we’re asking questions, then give good answers, rather than dismissing them.

We like CEOs that are willing to share lots of information, and do not selectively withhold certain pieces of data we ask for. Many times for instance, we’ll ask for historical board decks to understand how a company has performed against plan. When we ask for the data many times and never receive it, we know there is something off.

We like strong, detailed reporting. When companies have management metric dashboards that align deeply with the KPIs that we feel are important to a business, it gives us great confidence. This means they are managing to numbers we care about and are of like mind to us.

We also like when CEOs ask us for our (and our LPs) input on what they should care about, because it shows a willingness to collaborate and a desire to learn. While we don’t claim to have all the answers to anything, we ourselves have decent experience, and our LPs are some of the most successful people in the world. If a CEO doesn’t want to extract anything from us, this is one we’ll likely not be as interested in.

We like CEOs who are willing to say that they don’t know an answer to a question, rather than fumbling through it. The most intriguing ones are the ones that jot down the question, and proactively come back to us with answers after some time has passed.

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