

ASK YC: Dilemma - A few VCs interested, but we dont need funding. What do we do? - shafqat

We're a super early stage startup. I've been talking to a VC connection of mine for a while, exchanging ideas, helping plan next steps etc. Recently, a few notable VCs have gotten in touch wanting to meet up. How do I approach this? We don't need any funding, but don't want to lose their interest. Do I tell them flat out we don't require funding? I would love to keep in touch and  get advice and work their connections though...
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dkokelley
It is my understanding that VCs will never hunt you down and beg you to take
their money. Even if everything goes perfect as far as they're concerned, it
will be a while before you would get a check. The VCs want to meet with you
for two reasons:

1\. They are interested or invested in what you are doing. They may be
planning on investing in that market, or they may have even already invested
in a startup and want to scout out their competition. They may also be
invested in a complimentary area and are thinking about how what you're doing
could add value to what they already have.

2\. They are curious and think that what you're doing has potential (read:
They think you can make them money). They may or may not try to invest, but
the possibility of investing is used as "bait" to get you to meet with them...
except in this case you don't want the bait.

In either case, I suggest meeting with them. Let them take you along for the
ride, but always be cautious. There is a possibility that you could benefit
from their contacts, and starting the money talks now will help if/when you
need it in the future. Just be aware of the fact that they might be meeting
with you to gather information that can be used against you.

Good luck! You've obviously started something that has at least got their
attention - for better or worse!

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pg
As any VC will tell you, don't raise money if you don't need it.

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shafqat
Absolutely agree. Thats the dilemma - I want to be completely upfront. We dont
need and dont want money. What we would love is guidance, advice, networking
etc. But I imagine VCs aren't really in that game (btw, just read your essay!)

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pg
Most VCs you can safely tell you're not currently looking for money, and
they'll still help you. If you're good, they'll want to start a relationship
in case you need money later.

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jparicka
I wish we had this problem.

We're a new startup (called Elleo Ltd.) and we have developed a very
interesting piece of technology, semantic engine, a prototype that actually
works! Please let me also mention that this is no semi-functional semantic
engine (as we've all seen around) but a real thing on which our team (we are 3
world champions in programming!) worked for over a year. We believe with our
hearts that there's a need for our technology and that we can truly create a
new mean, a meaning that will make the world a better place.

Sadly, as you probably already all figured, we're all technical guys and we
have no idea how to "business-talk" and lift our startup off the ground, so
that we can carry on working on this full-time.

We've been reading a lot (and I mean a lot) on startups, VCs, etc.., we've
even attended The Next Web conference in Amsterdam but what we still didn't
quite figure is how to approach VCs and get them hear what we have to say.

I would very appreciate if you can give me an advice on this.

Also, if you'd be interested learning more about our exciting project, please
contact me on jparicka(at)gmail.com. Otherwise, wait for a demo which should
come out shortly.

Thank you!

Jan

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shafqat
Jan - will shoot you an email. I can tell you what we did and maybe it'll
help. Also, sent an invite for our startup so you can check it out!

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ericb
Say "maybe", or "not right now", or "my partners aren't sure" and they should
feel at home. :-)

<http://blog.pmarca.com/2007/06/the_pmarca_guid_2.html>

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mark_ellul
Yes meet with VCs, but don't sign anything and take any money until you have a
good idea about whats up for grabs.

When you accept VC money its the equivalent of going public, you will have to
make sure your start up turns around a profit or sells rather quickly...

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dshah
When you don't want/need money is the best possible time to be talking to VCs.
You might decide that with the right terms, you could use some capital after
all. Or, you might realize that they're not as interested as you thought.

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shafqat
Great advice guys, thanks a lot! I'll be honest with them, and hope they'll
keep in touch and help us out on the ride up (hopefully not down!).

