From What I Would Look for When Choosing a VC – Knowing What I Know Now? by Mark Suster:
I’ve sat on ad tech boards with board members who clearly knew little about impressions, fill rates, CTRs, RTB, eCPMs or the difficulties & opportunities of embedded mobile SDKs vs. HTML5. It felt like there was a wavelength with management and somebody wasn’t on it. I’ve been involved with SaaS companies with VCs who don’t understand demand generation, lead qualification, sales coverage ratios, sales forecasting or frankly when deals should be inside sales vs. outside sales.
I would think it would be a big f-ing nightmare to have a VC on my board who simply doesn’t get what I do and yet my perception is this happens often. I know many VCs who don’t have operating experience and frankly some of them are fantastic. Simply put – I’d be in search of a VC who had an intuitive sense of my product, my customers, my organizational issues, my competitors, etc.
In my experience, fantastic VCs have three characteristics: (1) They understand the company. (2) They believe in the company and the team, and express that. (3) They help in tangible ways (they don’t just express opinions). For each of these three, operating experience helps, but isn’t necessary.