An Enterprising Approach to Investment: Cindy Padnos

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"Most venture capital investors assess a founder... 'are they able to attract the best people, surround themselves with the most talented individuals, are they willing to be challenged by other people..." By Sarah Cone (Venture Associate, Illuminate Ventures)

Cindy Padnos is the Founder and Managing Partner of Illuminate Ventures, a Micro VC fund focused on early-stage cloud enterprise. As an investor, Cindy brings wealth of operating experience to the table being a 3x successful serial entrepreneur with one IPO and two M&A exits.

Recently, she was interviewed by Stanford professor Tom Kosnik as a part of Stanford's Entrepreneurial Thought Leaders (ETL) Lecture Series:

 

Here's Cindy in her own words.

On Team Building:

"If you can complement your own skill sets - not duplicate them - and if you can do that with people that are of equal or frankly even better quality and skill than you can bring to bear, there's just a multiplier effect. It's a really wonderful thing."

On Relationships:

"Relationships matter a lot. They matter in any business environment you might work in, but they particularly matter in a startup and they particularly matter in venture... So for example, people that might have been customers of mine when I was a founder, now become prospective customers of our portfolio companies and I can make those introductions. People who I was soliciting capital from for my own companies now become co-investors. And the credibility that you built with them in that last relationship absolutely translates into the new one."

On Talent:

"You have to recruit great talent, and that's never changed. People always say that during the bubble years it was much harder to find the best team, but the reality is that it's very hard all the time to get the best team. So one of the ways I assess and I think most venture capital investors assess a founder is are they able to attract the best people, surround themselves with the most talented individuals, are they willing to be challenged by other people."

On Metrics:

"We focus on cloud and enterprise software, and the metrics have changed dramatically. It used to be that CEOs cared about deals closed in a given month. Today in the world of subscription software and recurring revenue streams, you are much more likely to be concerned as a CEO about your churn or attrition than you are just about the deals closed that month. The best CEOs understand that if you don't retain the accounts then every deal you close may be a loss leader."

The Take-Away?

Relationships are what build companies - whether relationships with potential employees, investors, or customers. Cindy has nurtured great relationships throughout her 25 year career in Silicon Valley, and these relationships have been the foundation of her success as both an entrepreneur and an investor.

How do you build these relationships?

Make sure you bring value to the table. In her career, Cindy has made sure that she gives as much - or more - than she gets in return. For example, Illuminate Ventures has a 40+ member business advisory council of Silicon Valley luminaries that assist in deal sourcing and due diligence.

Illuminate Ventures organizes meetings for the advisory council three times a year, and counsel member and Stanford professor Tom Kosnik said that he has "more fun at those meetings and learns more than at any other get together we do in the Valley." It's important to Cindy that everyone on the advisory council feel they are receiving as much value as they are providing.

The most important lesson to learn from Cindy Padnos' career is that the key to building long term business relationships is providing value to your network.

About the guest blogger: Sarah Cone is a Venture Associate at Illuminate Ventures, bringing a broad interdisciplinary background, prior investment analyst experience and hands-on startup operating skills to Illuminate Ventures. She was an early Amazon employee, a public policy advocate for entrepreneurship with Public Knowledge, research analyst at Omidyar Network and a policy strategist at Google. Sarah was co-founder and CEO of social news reader Of Record. Follow her on Twitter at @sarah_cone.

Women 2.0 readers: What piece of entrepreneurial thought leadership would you like to share with us? Let us know in the comments!