The most common (negative) example of this I've seen is when founders sell the VC on the solution, not the problem they're solving.
Everything starts out fine (you have a VC who is really excited to help you build and sell product X, even if they don't really care about problem Y). But then you realise that actually, the market wants you to pivot slightly to product Z to solve the same problem Y.
And that's when the VC pivots from being helpful to harmful.
There are probably multiple other examples of how founders can influence the value-add of their VCs, but that's the big one that springs to my mind. And I bet it accounts for 90% of the 'harmful' instances.
There are so many aspects of my work life that this applies to.
Sometimes product managers will suggestion a solution to a problem instead of presenting the problem. Often times their solution needs work and unless caught early a lot of time gets spent going down the wrong path.
Another time this happens with the whole "xy problem." Where I or a team member have problem X, we come up with solution Y but have trouble implementing it. Then we ask for help with solution Y without knowing that maybe it's not the best solution and what we really should have asked for help with is problem X.
I think we could all do better by thinking more about what problems we're trying to solve rather than being married to our potential solutions to those problems.
It would seem to me the best situation would be a VC who actually has industry experience in your target market. I'm not talking about SaaS experience or hardware/software xp, but connections and experience in the actual industry you are trying to disrupt.
I mean it's great if they can help with product strategy, or technical stuff but.... they're finance people. I feel like setting this expectation might lead to no good.
Isn't there a Glassdoor for VC firms? I would love to use it if there was one! Presume they will need to bootstrap and can't VC funding ;-)
In my experience it seems like 75% of VCs are neutral. They try to be helpful, aren’t really, but don’t get in the way, and their cash is green. They can email me two times a day if they want, it won’t help me any more (and will be annoying).
10% are actively harmful. Either they have really bad advice, are a distraction, or try to lead your company down bad paths.
15% are incredibly helpful (maybe the 10% and the 15% should be switched), and you should do whatever it takes to work with them. They can think through problems instantly, see 15 steps ahead, understand where you are and what you should be focusing on, know everyone, and actually put in the work. I’ve been shocked at how helpful some VCs can be in eliminating most of your biggest problems. It’s just rare that happens.
That’s why I’m surprised to see how little “track record” was valued. With few exceptions that’s my #1 consideration when deciding who to take money from, or perhaps #2 begind “reputation.”