IQ Interview: Ryan Moore, General Partner at GrandBanks Capital
By Bruce Powell
Ryan Moore is General Partner at GrandBanks Capital – a Boston-based venture capital firm whose partners have been lead investors and senior executives at such industry-leading companies such as Yahoo!, E*Trade, ATG, GEAC, SOFTBANK, Lycos, The Learning Company and 1-800-Flowers.com.
A long-time investor who has helped grow several companies, Ryan knows that the people behind a business are the most important factor in its success and he’s developed a great intuition for reading and assessing people.
Recently, Ryan has identified significant opportunities in the Canadian market and while Canadian VC’s have cut back on investing, he and GrandBanks continue to see Canada as a land of fertile opportunity.
We sat down with Ryan recently to hear how he assesses the people behind the investment opportunities he reviews and the characteristics he looks for that result in business success. And while his comments are biased to assessing leaders – many of his insights are relevant regardless of the level you’re hiring at.
Questions:
IQ: Do you have an overriding strategy when assessing the people behind a given investment opportunity?
RM: Absolutely – I think it’s a necessity seeing as the people behind a deal are the most important thing when you’re making an investment – especially if you’re investing in the early stages of the business. You’re essentially betting on the people.
The most important thing to consider is to look at the person who will be acting as the leader – the person you’re essentially giving the capital to. You have to think of the ‘who’ you’re putting your money behind instead of what. One of the biggest things I look for is a leader who will go out and hire people better than themselves – people who have self-awareness and self-confidence and are secure enough in themselves to know what they’re good at and what they’re not as good at.
IQ: What’s your process for determining if leaders behind a deal are a “sound investment”?
RM: A lot of it for me really comes down to gut feel and having a certain level of trust - since you’re essentially forming a partnership. You have to have a good instinct and intuition for people.
In terms of how I decide, one of the best ways is to just spend a lot of time with people to better understand them – to find out what makes them tick. One of the other ways that I find really gives you insight into the type of person someone is - is how they act during the negotiation process. The manner in which someone negotiates is a huge sign of how they operate. I look for people who show mutual respect, have a good understanding of the situation, and possess a sense of integrity.
One last key thing to look for is to find people’s referenceable contributions from prior roles – what did they bring and what did they accomplish? Many people are observers and few are actual “do’ers” – and the market needs “do’ers” now than ever before. Finding people with a strong resolve and a proven track record of success is critical.
You definitely have to do your due diligence when you’re getting ready to make an investment though. A bad decision on who to invest in can have significant negative repercussions for us – usually much more than a typical bad hire would cost a company.
IQ: What about your assessment process would you say is different from other VC firms?
RM: We really focus on what the motivations of the entrepreneur are since we feel that is one of the keys to finding the right type of people – determining what drives someone. It’s tricky however because depending on the person and their experience, the motivations can be quite different. The serial entrepreneur is quite different from the first-time entrepreneur who has never started something before.
The right type of person might vary depending on the business as well, and what the keys to success will be. It’s important to really dig though to find people’s TRUE motivations – the things that are really going to move the needle. When you’re investing as much money as we are in many cases, you can’t just come out and ask the question and take what they say as so. You have to spend time with the person, get lots of information around their past, and really look for those signs that are true indicators.
IQ: How do you differentiate GrandBanks Capital from other VC’s when you’re talking to businesses?
RM: We take our role as Venture Capitalists very seriously at GrandBanks – we view ourselves as being part of a service industry, not just providers of capital. We work with the entrepreneurs to build their teams and we like to get involved and help contribute to the success. We don’t want to be seen as passive lenders.
Because we always make an effort to get involved and have a hand in the success of the investment, when marketing our firm we always lead with our references and testimonials. You’re only as good as the work that you’ve done and we feel our body of work paints a good picture of what we’re all about and why businesses should consider us.
IQ: What Challenges have you encountered in your business?
RM: One of the challenges recently has been around a stricter adherence with capital efficiency. There’s too much VC money out there right now and the easy solution for many people is to just throw money at any problems that arise. When we’re looking at investment opportunities and the people behind them, we need to ensure we have people that will act responsibly with the capital they have access to.
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Bruce Powell, Managing Partner, established IQ PARTNERS as a leading recruitment firm to help entrepreneurial companies hire better, hire less, and retain more.
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