Signs A VC Is Just Not That Into You(blog.eladgil.com)
blog.eladgil.com
Signs A VC Is Just Not That Into You
http://blog.eladgil.com/2012/07/signs-vc-is-just-not-that-into-you.html
4 comments
The article is good but I don't think it delves into the "middle ground" which is so common for startups. A very small percentage of companies elicit huge interest (i.e., fast action, term sheet quickly, etc.) A surprisingly small set of companies that meet with VCs elicit signals that are clear nos (e.g., not responding to emails and so on). These are usually ones where the idea is so dumb or the pitch is so bad, the VC questions the entrepreneur's capabilities. I'd say the vast majority of meetings turn into this netherland where the VC isn't sold on the idea but also isn't sold on NOT funding the idea. S/he either doesn't know the space well enough, isn't sure his/her partners would agree, doesn't have enough clout in the firm yet (see previous point), doesn't know the entrepreneur well enough to feel conviction, etc. So s/he doesn't say yes. But s/he doesn't say no yet either because s/he wants the optionality in case (a) another VC firm who is well respected or know the space decides to go after it (which creates the super-annoying lemming effect), (b) another partner and his/her firm gets "conviction" on the company independently, (c) s/he hears other good things about the entrepreneur, etc. I think for most entrepreneurs, this is the most annoying category to be in.
I'd be very careful with this attitude. What VCs are trying to do is retain the option of saying "yes", for almost everybody. They are happy to have your team spend time maintaining that option for them. If it costs them almost nothing, why wouldn't they?
The best rule of thumb here is "maybe means no".
The best rule of thumb here is "maybe means no".
What's a nice but clear way to end the conversation without damaging the relationship in case you want to pitch them for Series B?
They are offering it, the 'lack of response'. You can choose to drop people and then been strictly interpretive of their requests (or lack there of) for followup. So if you leave a meeting and there are no next steps, just stop talking. Later at your series B you can offer to bring them up to date on your current plans.
Understand that some (many?) VC's understand that saying "no" explicitly can hurt your prospects with other VCs (you will be asked to explain why that other VC said "No" which is impossible to do usually because you don't have the complete picture). So they let it drift quietly silent and understand when "you are really busy and might not get back to them for a while."
Understand that some (many?) VC's understand that saying "no" explicitly can hurt your prospects with other VCs (you will be asked to explain why that other VC said "No" which is impossible to do usually because you don't have the complete picture). So they let it drift quietly silent and understand when "you are really busy and might not get back to them for a while."
Agreed. You can basically stop trying to prompt them to follow up with you (since they are non-responsive / won't suggest next steps typically in this scenario).
Another tough thing to balance is the flip of this - how to politely drop a VC you do not want to talk to further, who is interested in your company and knows you are fundraising...
Another tough thing to balance is the flip of this - how to politely drop a VC you do not want to talk to further, who is interested in your company and knows you are fundraising...
"I'll take that as a no. But hey, thanks for your interest. "
["that" being a wishy-washy response, no contact for weeks etc]
Here's a post I wrote about this ages ago: http://www.derekscruggs.com/slow-turndowns-bad-up-front-cont...
I've found that giving people permission to say "no" is powerful in many contexts, not just sales.
["that" being a wishy-washy response, no contact for weeks etc]
Here's a post I wrote about this ages ago: http://www.derekscruggs.com/slow-turndowns-bad-up-front-cont...
I've found that giving people permission to say "no" is powerful in many contexts, not just sales.
I think in the type of scenario you mention (i.e. lots of foot dragging without a clear answer), 9 times out of 10 the entrepreneur should just quit following up with the VC and move on.
The logic is simple - if the original VC is waiting for a new VC to get excited about it, it would not matter if the original VC is still in the mix or not (as the entrepreneur now has someone else interested). If no one else gets excited, spending time on the original VC is a waste of time, since she won't tip unless someone else does.
The logic is simple - if the original VC is waiting for a new VC to get excited about it, it would not matter if the original VC is still in the mix or not (as the entrepreneur now has someone else interested). If no one else gets excited, spending time on the original VC is a waste of time, since she won't tip unless someone else does.
BTW I don't disagree with what you just said - was just trying to explain this middle bucket because I don't think it's a clear no. Sometimes (very rarely) those middle bucket interactions turn into funding. But I agree w/ you that it's usually a waste of time.
Yeah, I think we are in agreement! :)
pg's take: http://news.ycombinator.com/item?id=3550195
Ha. That is pretty good. There are some steps between "Hi" and "Here is a term sheet" but you can definitely tell if someone is very excited.
Unfortunately, it is harder to tell if someone is disinterested as VCs try hard to maintain or preserve relationships for the future, which makes them more cautious in just saying "no" outright. I think the good ones are pretty up front about not being interested early.
Unfortunately, it is harder to tell if someone is disinterested as VCs try hard to maintain or preserve relationships for the future, which makes them more cautious in just saying "no" outright. I think the good ones are pretty up front about not being interested early.
Here's what Mr. Graham said:
You can translate most of VC-speak with just 2 rules:
1. "Here is a termsheet." -> "Here is a termsheet."
2. * -> "No."
You can translate most of VC-speak with just 2 rules:
1. "Here is a termsheet." -> "Here is a termsheet."
2. * -> "No."
Are we really reduced to this...
Half of these could come straight out of Vogue, "How to tell if you're date liked you?"
Half of these could come straight out of Vogue, "How to tell if you're date liked you?"
Is there a way to turn this around by gently prompting the VC to start playing the role of a truly interested investor? That is, challenge them to reverse some of these listed signals. If as a part of normal conversational cordiality, the VC plays along (to avoid sending a clearer no-interest signal), eventually they're hypmotized into thinking they are interested?
For example:
"What are your suggested next steps?"
"When should our next in-person be?"
"Which more senior partner will be handling the next steps?"
"Why should I take money from your firm?"
For example:
"What are your suggested next steps?"
"When should our next in-person be?"
"Which more senior partner will be handling the next steps?"
"Why should I take money from your firm?"