Gone are the days when New York’s venture capital game was dominated by a few large players; competition for deals is increasingly fierce. So what does a VC do to get ahead? For First Round Capital partner Phineas Barnes, it’s less about sharpening elbows and more about making sure founders feel like they’re getting good service.
“I’m going to say ‘No’ to 149 out of 150 people I meet,” Mr. Barnes told The Observer. “If the meeting was useful to other person, that’s important to me, even if it doesn’t lead to a deal.”
Mr. Barnes’s focus on the founder’s experience can be traced back to his own past as an entrepreneur. He was one of the earliest employees at apparel maker AND 1, rising to creative director as the company grew its revenue from $3 million to $300 million. He founded ResponDesign to make fitness video games and learned about the founder’s hard road by walking it himself. “I had this experience as an entrepreneur, where you walk into a meeting with a VC, and the first question is, ‘Who are you?’ and the second question is, ‘What are you doing?’”
Mr. Barnes has wooed startups such as Simple and Nodejitsu by taking the opposite tack, emphasizing his role as a partner-in-arms, not a top-down money manager. He even asks those he meets with to fill out a survey with questions like “Was I on time?” and “Did you get value from the time you invested in me?”
Such deference may come as a surprise to those seeking funding, especially considering its source. First Round was an early player on the New York scene, guiding companies such as GroupMe and Mint.com to exits for eight- and nine-figure sums.
“Phin is special,” Birchbox co-founder Katia Beauchamp told The Observer. “He is passionate about the idea of helping us find the shortcuts along the way. He also promised us that he would never get in the way, and he stayed true to both of those things.”
Mr. Barnes looks for projects with transformative potential. Birchbox, he says, isn’t “just another stuff-in-a-box business,” but rather a company that changes the way consumers discover new products. Sherpaa helps businesses shop for employee health plans. Both company founders attest that, with Mr. Barnes, they believe they’re getting a partner, not merely a backer.