On the latest episode of Minimum Viable Podcast, I had the pleasure of sitting down with Charles Hudson, Founder and Managing Partner and Founder of Precursor Ventures. Under Charles' leadership, Precursor has raised four funds totaling over $175 million and has backed more than 375 companies led by over 400 founders. Prior to founding Precursor, Charles was a Partner at Uncork Capital, Co-Founder and CEO of Bionic Panda Games, and held various product roles.
Our conversation covered a lot of ground, from Charles' journey into VC to his hard-won lessons on what makes for fruitful founder-investor relationships. I really appreciated Charles' willingness to share his experiences candidly – the good, the bad, and the gruesome. His insights are a goldmine for founders and investors alike who want to build lasting partnerships that drive meaningful outcomes.
Catch the full episode with Charles Hudson here:
But hey, I know you're busy. So I've distilled Charles' top 5 pieces of wisdom right here:
At the core of any great investor-founder relationship is trust. But as Charles points out, that trust has to be earned through genuine, straightforward communication.
"My view is I go into these assuming that nobody trusts me or knows me if we haven't worked together. And that was a big unlock for me, if I assume that nobody trusts me or knows me, then I have to earn their trust."
Investors, take note – don't just assume founders trust you from the get-go. Show that you're worthy of that trust through your actions and words. Be real with them, consistently. That's how you lay the groundwork for an awesome partnership.
We've all seen it happen – an investor makes grand claims about all the ways they'll add value, only to fall short.
"One area where [investor-founder relationships] go wrong, I've seen quite often, is VCs overpromising what they can actually do for founders. And I said, okay, so let's not overpromise what we’ll deliver."
Be upfront about how you can realistically support founders. They'll appreciate the honesty way more than any flashy promises. Clarity on expectations from the start sets everyone up for success.
Giving tough feedback can be awkward. But as Charles has learned, it's crucial for driving founder success in the long run.
"I think what happens is in the short term [is that] there's limited value to direct, honest feedback that isn't helpful or isn't what the founder wants to hear. But in the long term, the value of having relationships that are fundamentally built on honesty is much, much greater."
Yeah, those convos might feel a bit uncomfortable in the moment. But founders need investors who can tell them the hard truths, not just what they want to hear. It's a skill worth developing – your founders will thank you, even if it doesn't feel like it at the time.
Now, this doesn't mean you should be dishing out criticism left and right. As Charles wisely notes, you've got to know your lane.
"I always ask myself, do I have permission to provide this person with feedback in this domain? Sometimes I conclude the answer is no. This person simply knows more about the problem than I do."
Investors, remember – you're not an expert on everything. Recognize when the founder has deeper insight than you and learn to defer to their knowledge. Overstepping erodes trust, so be mindful of when your two cents are truly valuable.
Ah, the dreaded follow-on financing convo. It can get pretty uncomfortable if expectations aren't aligned.
"Whatever I tell them should only be a positive surprise. People shouldn't be wondering about whether I'm going to invest more. I have some founders where we don't talk that often, we're not that close, I don't have much insight on the business – and it's not about liking them."
Don't leave your founders guessing about where you stand. Have an honest discussion about your approach to follow-ons early on. That way, founders can plan accordingly and there's no blindsiding down the line.
