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Ways a VC says no without saying no (unsupervisedmethods.com)
383 points by RobbieStats on July 20, 2017 | hide | past | favorite | 171 comments

These are all still pretty fast No's in my experience.

The worst No's are the ones where they ask to do Due Diligence and then never open the dropbox folder. Or if you are on your fifth meeting and they just keep trying to pump you for competitive information.

So how do you know when you get a Yes?

When you get a wire or a check. That's the only way.

Even a signed note or Equity docs don't mean anything until that money clears.

The best No's I've had were from Bessemer and a16z years ago. Almost immediate and right to the point that they wouldn't invest, with specific reasoning/metrics behind them. A++ would get told no again.

> Or if you are on your fifth meeting and they just keep trying to pump you for competitive information.

15 years ago after the funding I'd arranged to start a company fell through after about a year of travelling to raise it...we finally went to a VC. He insisted that he could not sign an NDA because of the precarious position it put him in hearing so many of these pitches. At that point we figured, this was basically our last option anyway so we gave him the pitch.

He really liked it and wanted a local company to build it that we weren't comfortable with, so we parted ways.

5 years later I found out he had the company build it about as well as he could from memory of our pitch. It had plenty of flaws but it was a company that ended up selling for several million. As far as I can tell, it was re-sold and the company had a complete shift of focus afterwards.

Meanwhile, in NY 2 years after my meeting with the VC an enterprising group of people who were not affiliated with that VC at all pursued and built a business out of one of the core features of my original platform. As it turned out, that feature stood as a business on it's own. I'd included it in the overall system because as an integrated feature, it facilitated a lot of efficiency gains.

My platform was a comprehensive information system for public schools designed to make it easier for teacher's to focus on their students, reduce their workload and make it easier for them to communicate directly with parents. As a part of that system, there was to be a market place for teachers to sell and exchange lesson plans. This was back in 2003 and now smaller companies have popped up doing various parts of what our original plan was for.

In NYC, Teachers Pay Teachers has made a business out of that aspect and for what it's worth, I'm really happy that they have been successful.

The whole experience was really eye opening and I've been extremely reluctant to pursue funding for any of my business ideas because of it. I wish that wasn't the case.

It's a risky game. We've had a major accelerator application, proceeded to an interview, they requested our business plan which we promptly sent to them. Then they went silent and stopped taking our calls or answering emails. We moved on, only to discover that their alumni for this batch included a similar company that was shameless enough even to use complete sentences out of our business plan. I avoid everything that's linked to that accelerator or people from it since then.

We have similar stories... A possible investor (a supplier for our product) went through a Due Diligence with us to learn more about our process etc. Couple of weeks later our founder got the no plus a note that they would not sell their product to us anymore, since they were planning on persuing service similar to ours within their own company.

A couple months later our founder has another possible investor and we go through a Due Diligence again. This time we were already wary from our first DD (plus the investor had a bit of a reputation of being a scammer in the past) and lo and behold their IT guy wants to have full access to our software packages / pipeline, source code and databases, so they "can assess the quality". (...) I didn't end up giving them any of our source code, which they were fine with after a while. This whole spiel went on for another month where they "focused" more on other processes. Eventually they went quiet and their CTO asked me privately if I wanted to jump ship to join them, because they need someone with my expertise...

Does this happen often or did we just have some bad luck? Also has anyone ever been asked to provide the source code to their product? (that seemed kind of outrageous to me)

Maybe if people named those people their scam would be a little harder to execute next time.

the agreements we did have included that we don't disclose their names. I did not see the exact wording and don't know if they extend beyond the due diligence, so to be on the save side I'd rather zip it.

Plus I think a write-up of guide lines or red flags that one should watch out for during a DD or when talking to a VC might help more than just name calling. What worked the last time: Google their names and go past page 1 (Most seem to know how to alter their search results)

> the agreements we did have included that we don't disclose their names.

That's just one sided. They can steal your ideas (because they didn't signed the relevant NDA), and you can't even name the bastards if they do?

I have zero experience in this stuff, but it looks like in this situation, one should either refuse to sign this sort of non-disparagement clause, or have them sign the relevant NDA.

I think it would be helpful to other entrepreneurs here if you could name and shame

I think the whole story is not as simple. First of all, it happened in China, the country with vastly different cultural mentality. "36 stratagems" are fully alive and kicking here. People in businesses here lie, cheat and deceive because it's considered to be market acumen and cleverness. The fund behind the accelerator made a right decision in the cultural context: to improve the position of their own "family" using every available material. Bad faith? What bad faith? I bet they won't even understand what they did wrong when confronted. So I generally avoid any contact with Chinese funds unless absolutely necessary.

We've had our own little revenge though. The competitor is funded well but has a very weak technical team. We used numerous holes in their systems to obtain critical data about their business. Shall we use it or not is another moral question, but it gave us great insights and let us adjust our strategy without spending our own or VC's money and time on getting to know it.

I wish they would. This is like being in a group of friends and you're talking about potential romantic partners and one keeps vaguely alluding to a negative experience with someone but not actually being helpful.

you should publicly shame the VC. it should be a necessity. if you're worried about the backlash at least go anonymous and publish on something like pastebin.

It would be relatively easy for the VC to identify where the 'anonymous' leak came from - the people they screwed.

When you screw so far and wide, it becomes really hard to hide.

I find TPT interesting and - as a teacher - have a strong interest in platforms that could help debalkanize curriculum and support materials; however, it's always seemed to me that the marketplace model (while a successful business) must limit both the amount of teacher engagement as well as the type of teachers/materials present on the platform due to the incentives involved. Because of that, it's never seemed systemically useful.

Did the platform you built attempt to create a shared curriculum libraries? If so, was the focus on the school, district or national scale?

Happy to take a response via email so as not to derail the thread (see profile).

It did. At that time this was a system that would be deployed within each school on its local network for a lot of other functionality. The pitch around lesson plan management was sharing and exchange internally within the school while also allowing teachers to sell in the marketplace network of other people on the system. The schools themselves would be able to build a library of quality lesson plans that they could use to continuously try to improve each aspect of the classes they taught by experimenting with more effective ways of teaching each lesson within each class.

That's awesome. Did this system go into production? If so, were you able to monitor how (or if) teachers used the shared curriculum to iteratively improve curriculum? Did the platform manage discrete files or were lesson content/relevant media/assessments/etc. associated with each other in a network of some kind?

It's a topic of personal interest. I believe teachers are far too isolated in their lesson planning/curriculum creation which leads to significant redundancies in labor, glacial curriculum improvement, and contributes to the difficulty serving the needs of my individual students.

After the funding fell through we never got to build it, but you describe the exact problem.

I may publish the business plan one day just for fun in case anyone else wants to follow through on it. :)

Came here to write the same thing. This needs about 5-10 more "No" variants that all include the words "yes, we're excited to move forward with you, and...".

I'm not sure we ever got a VC to give us one of these waffling "no"'s without apply serious pressure.

#truth on the don’t trust a contract detail mentioned

I've known people who claimed to be from a VC fund that had $10MM raise out of $50MM and was making investments.

In reality they had no money raised but signed $11.5MM in investments with startups.

It's a crazy world out there. Vet your investors.

I don't understand your story. Why would they sign investments they can't pay for?

Free option? Vanity? You get to know the books, the team, etc. And if before you ("VC") haven't been figured out the startup gets traction, you can find money to get in (maybe).

I think you hit it with the free option. They are syndicating their investment as soon as they have some sort of agreement and they probably have some contigencies that allow them to get out for any reason in the event they can't find investors.

Probably they intended to use and demo the signed investments to "sell" their fund / raise the money.


They thought they could raise the money once they had the portfolio.

You're trying to think rationally against an irrational situation :O

Something was going through their head. For comparison, how many people who are poor enter terms to buy hundreds of millions of dollars of property without having any mortgage or ability to pay or any expectation other than "wheeeeee - that was fun."

I'd wager approximately zero. There is more to the above story. As described, these VC's wasted tons of their own time. How did they even have offices?

There are ways to acquire assets without putting any money down yourself, so definitely possible, though not very easy.

An example: say you acquire a company worth $10m and have no money in the bank. You could pay 50% of it in stock ("you'll be part of an amazing growth story, and the $5m stock you get today will be worth $50m in 5 to 10 years") and then go borrow $5m from a bank (or go through an equity investor) to fund the other 50% of the acquisition price. But often you'll need a binding LoI to get a loan.

Doesn't always work, but if you're someone who is well connected then it's quite doable. I've seen it done.

Another person that comes to mind is David Baazov: https://www.forbes.com/sites/nathanvardi/2014/12/01/the-king.... He aligned things well and put deals together, and ended up making a ton of money because of it.

I toured some apartments without the ability to afford them.

Perhaps these VCs were expecting money to come in but in the end their fund fell apart?

Touring is very different from signing!

OP said "had no money raised but signed $11.5MM in investments with startups". maybe they mispoke.

>Almost immediate and right to the point that they wouldn't invest with specific reasoning/metrics behind them.

Was going to comment on the article itself: You shouldn't walk away from a VC without this in hand. Kind of a general sales concept - never take "no" without a good reason.

A related sales concept is forcing people to say no, even if you don't get a reason for it. This is why some very effective sales folks will follow up essentially forever until they get a definitive answer. It looks like crazy behavior if your mental model is "I brushed him off twice, clearly that is a constructive no, why can't he take the hint", but the rep's mental model is "I close deals all the time after the 18th unanswered followup. If I haven't gotten a no yet, there is insufficient evidence to exclude the possibility that e.g. they're just busy."

That's why when I'm not interested or trying to cancel something I always give a content-less, irrefutable reason.

If you give a specific reason, they will challenge it.

"No, I don't want this product, because I'm not interested."

"I'd like to cancel this credit card, because I don't want to have this credit card anymore."

I've lied to pesky sales reps and telemarketers and told them that I've been diagnosed with terminal cancer and have six months to live. That ends the conversation pretty quickly and they never call back.

"Oh, I'm so sorry Mr Enraged_Camel... Perhaps I can interest you in a new unsecured credit card with a $25k limit?"

"But why don't you want this credit card anymore?"

Because I want to cancel it.

That's fair, but fake reasons are surprisingly effective:


Of course a salesman is more likely to push back than a random bystander, whatever reason you give.

I've had this exact thing happen to me (while talking to customers). Recently had the person answer after the third or fourth follow up and needed more time as they haven't gotten to getting all the sign offs.

That being said, I'm not a telemarketer, I work with high end Integrations and before you get a proposal we've had a few conversations. If the answer is no, I'm respectful of that and I want to know what we can do better next time.

I'll keep following up until I've gotten an answer.

> So how do you know when you get a Yes?

> When you get a wire or a check. That's the only way.

YES to this.

> The best No's I've had were from Bessemer and a16z years ago. Almost immediate and right to the point that they wouldn't invest with specific reasoning/metrics behind them.

Don't you mean "without specific reasoning/metrics behind them"?

He's saying that they made a decision, then explained the reason for their decision. That's the best possible way to receive a No as a founder.

I think a comma is missing:

> Almost immediate and right to the point that they wouldn't invest, with specific reasoning/metrics behind them.

I don't think so, I think it says he was really pleased with the rejection (and that could have been because it came with actionable feedback, like reasons and metrics.)

I think they're saying the "no" had specific reasons and metrics for the no.

totally agree on that (yes is when the check clears) I was helping a startup getting VC and basically the check never came. Granted that they wernt' very happy with the progress and that was pretty transparent, but they never actually said it would impact anything. I think the founder could have handled it better but I can understand taht it's sometimes hard to tell what a hard-requirement is from a stretch-goal.

Is a check really fine? I presume if a VC is willing to give so many other things and renege on them then he might well give a check that bounces too?

I'm pretty sure it's illegal to write a cheque you know won't clear.

Oh wow, I didn't know that. I thought a check was a permission to withdraw rather than a guarantee of available money, kind of like a paper form of an ACH withdraw (which is why I thought we had cashier's checks and such).

I did some searching now and it seems that intent to deceive/defraud is required at least in some states. Common sense would say you wouldn't get any company shares or other things until your check clears, so if it bounces, is it actually fraud? Or just being a jerk?

Due to the way the US legal systems work, it is unlikely you'll be arrested for uttering if you bounce a $50k check as an accredited investor but far more likely it will happen if you bounce a $50 check as a welfare recipient. There are a number of gates which will prevent the first incident from becoming a criminal case -- the police will laugh at it, the DA will decline to prosecute, the 'victims' will not choose to set fire to their professional reputations by demanding a prosecution, etc etc. Police won't laugh at the second one -- sorry, business owner, we know that people defraud you all the time and that sucks. The DA has an expedited program to defer some of these cases and prosecute repeat offenders. The victim has someone whose literal job it is to move the case forward and convictions per year may be a KPI for them. (That someone is probably not a lawyer, this being not worth the time of a lawyer on a private payroll, but rather "loss prevention specialist" or similar. "Yes sir, we do intend to prosecute. Yes sir, I would be happy to get you that documentation. Yes sir, I can be at that meeting. Thank you sir, we appreciate you looking out for us.")

Looks like you've read The Divide by Matt Taibbi. Excellent book, imo.

Also a difference between being arrested for fraud (criminal law) and suing the VC in a civil suit for the amount that was promised...

> but far more likely it will happen if you bounce a $50 check as a welfare recipient.

That's quite an extreme mischaracterization.

It is VERY unlikely that you are going to be arrested for bouncing a single $50 check.

Generally the people who get arrested for bouncing a check have something extra on top of it. They immediately sold the purchase (so it can't be reversed). They have bounced many checks up to this point (you mentioned repeat offenders). etc.

There is genuine injustice in being poor. That "bounced check charge" disproportionately hits the poor. And banks were going out of their way to reorder transactions to make things bounce. Parking fines, usage fees, etc. all are meant to tax the poor.

However, even multiple bounced checks are unlikely to result in prosecution without something to add to the pile.

As I've gotten older and... "more successful", I have been able to see this divide myself, experience it on my own. The "bounced check charge" (NSF charge) almost exclusively hits poor people than it does people with money. Because when I was poor and walking miles to work at 0500 in the winter, and I bounced a check (which did happen more than rarely), the NSF fee was charged and the bank would never gift me with any forgiveness, even though I did call and try to explain the situation every time. It was never an intentional bounce, but when you're scraping by, it's very, very easy to bounce a check on accident. This was in the 90s and early 2000s before checks cleared immediately. But as I got older, and started programming for a living, and my social mobility kicked in and I crossed the divide... I never, ever, ever have the NSF fee stick for overdrafts. Never. It almost never happens now because it's typical for banks to tie a backup to your checking account for overdrafts (e.g. savings) so it's been a while since this has happened to me. But when it did, I'd call the bank, explain that it was a mistake on my part, and the banker would look up my account and immediately take it off and then apologize to me. Life is totally different on this side of the river. It is astonishing.

Incidentally, some time ago, I used Bank of America. I had about $300 in my checking account. I made about $300 in purchases for the month, like groceries and gas and this kind of thing. Then, something happened with the car, and I had to take it in to the shop. They could fix it for $250. I knew I didn't have it, but I decided I was willing to pay the overdraft fee (of $35) in order to get my car fixed, since... I needed a working car. Anyway, I made the charge on my card. Then, the next day, when all those charges posted, Bank of America rearranged the order of my posts so that the $250 charge went on the account first, and then charged me about ten $35 overdraft fees. They rearranged the post order so the largest transactions went first. Anyway, scumbag banks aside, they were actually sued for this in a class action, but through some "miracle" for the bank (a shredder), they "lost" all of their records for that year, including my $350 in overdraft fees that they charged me. So I wasn't able to get my money back even years later. Class actions are total ripoffs.


I think all cases of writing a check you know isn't covered is fraud. The cases when you thought it would be covered but you were mistaken are difficult to judge, need to prove what you knew when.

From the VC side, it looks like this:

"LOOK AT ME LOOK AT ME LOOK AT ME! Ok, what do you have? 40 slides that tell me nothing other than you have a big vision and if you own 10% of <insert market here> it will be worth a lot."

At this point, VC options are:

1) Hard pass (crazies, maybe 60% of people pitching), but you want them to still refer their friends for better deal flow, so <insert excuse here> that makes them feel better about rejection.

2) Soft pass (30%): maybe they have something, hard to tell without spending weeks figuring out what they really meant, and if the team is even the right team to be solving the problem, much less actually competent. Give them some <come back when> that doesn't ruffle them too much.

3) Next stage of funnel: The 10% that actually got their concept across, explained why they are a good team to implement it instead of the other 10 people you heard with the same idea, and why now is the right time. Enter diligence, and hopefully you can convince the other partners that you aren't crazy by taking a chance on them.

Would it be helpful if a team adds a slide to the effect of "Here are reasons why you might NOT want to invest in us"? i.e. stating the deficiencies we know we have and addressing them head on instead of waiting until reality differs from expectation.

Usually the better pitches have a discussion on risks/challenges to overcome, and how you are going to use the current VC round to do that (and the timeline, etc). "Big risk item is delivering T tech by D date, requires P person for M months (usually a specific person), who we will hire at time T_1 after getting our funding round"

If most of the VC's concerns are on your list of challenge milestones, then they will be more likely to believe the rest of your pitch as being accurate.

I have never pitched a VC but this was surprising. A pitch that requires a specific person who hasn't yet been hired? What if the person is unavailable? This seems to be misleading specificity.

Somewhat common in pitches from seasoned entrepreneurs. It shows they've thought things through, have identified specific individuals they believe they should attempt to onboard post-funding, and are operating as though they actually know what they're going to do right after they get the giant check.

I'm not a VC, so take this for what it's worth (nothing) -

Self-awareness is huge. You should know the reasons why a VC might not want to invest in you, regardless of whether it ever comes out of your mouth or goes on a slide. If a VC is interested but has concerns, they're going to ask these questions, and you'll be better prepared to address them. It's up to you - and situational awareness matters - whether you decide to speak to these points even if you're not asked.

Totally! So just show them you've got situational awareness by taking the initiative without them having to ask.

> Would it be helpful if a team adds a slide to the effect of "Here are reasons why you might NOT want to invest in us"?

No. Having a list of risks and assumptions you can send folks is good, and shows maturity. But it doesn't belong in the deck, which should be for introducing yourselves and telling your story.

What are your thoughts on the need to understand the idea maze of your industry https://youtu.be/GSHg-sLlCAc

so <insert excuse here> that makes them feel better about rejection. .... Give them some <come back when> that doesn't ruffle them too much.

Do you really think these people are that emotionally fragile?

That they really can't take (let alone appreciate the value of) a simple and straightforward "No", with metrics and reasons?

As in any other context where one hears lines like these -- the only person who's meant to "feel better" after giving excuses like these is the person giving them.

The basic message it conveys is: "We're secure. You're not."

Yes, people are often emotionally fragile.

Yeah, people are people I guess.

Even so - I find the stance "You're super easily hurt / offended / etc" (or as the above commenter put it, "ruffled") - "and I'm not, so I need to do what's best for both of us, and talk down to you" - to be distasteful, on multiple levels.

As an entrepreneur, I find it valuable to have coffee with entrepreneurs I don't know and listen to their pitches, founder-to-founder. When I do this, just like VC's, I find most of the pitches I hear are terrible ideas pitched by people with no knowledge/experience of the industry/problem they are trying to solve.

Why do I find this helpful? Because I watch my own reaction to the experience. I've just met this person. They've just told me their dream, the thing they quit their job to do, invested years of their life in, and it's an absolutely terrible, terrible idea. What do I do?

If I can, I give them good advice within the confines of what they are trying to do. And in almost all cases that's as far as I can go.

I just met this person and they just met me. It's not my job or my place to crush their dreams and the odds are vanishingly close to zero percent they'd listen to me if I tried, so I don't (think about all those VC rejections, how many of those VC rejections caused the entrepreneur to drop the idea? The answer is probably pretty close to zero).

Even with close friends, it's very dicey whether to say "I think that idea is a mistake" because most entrepreneurs are so driven by passion (and need to be).

Each time I hear one of those terrible pitches, I try to remember this is why VC's don't want to tell people solid no's, and this is why I should be so appreciative for every hint of criticism I've ever received. Because people will absolutely tell you your idea is great and they'll almost never tell you what's profoundly wrong with it. I put as much truth and as much insight into my answers and observations on those painful pitches as I think the entrepreneurs can hear, and hope they'll eventually internalize it and pivot in a better direction, because "please, for the love of god and your family and mortgage, stop what you're doing now" simply isn't an ansewer the entrepreneur will be able to hear from a stranger (or probably even a close friend).

You are doing God's work, my friend. I really appreciate your thoughtfulness about this. Hopefully you have had some influence in getting these other founders to look more closely at their plans.

The same thing can happen with people you know well. Several years ago, my closest friend, an older gentleman retired and living on social security and his wife's income, got into a notorious MLM scam called Photomax.

Their pitch was that for only $50/month, they would store all your photo files in a secure facility, and would even allow you to order prints at extra cost.

But wait! There's more! The $50/month didn't just buy you photo storage, you would have the opportunity to sell this service to all of your friends and start making big money on your downline.

Of course they also provided sales training. One day he invited me to eavesdrop on one of their training calls, where he and his cohort listened on a conference call while their upline cold-called potential suck^H^H^H^Hprospects.

Of course none of these calls went well. But why let reality stop you? My friend decided that to really succeed, he needed their advanced training, which would only cost $10,000.

As gently as I could, I tried to explain that this exact same service was available from multiple providers such as Flickr, SmugMug, 500px, etc. either for free or for a tenth the cost of Photomax, and this smelled very much like a scam to me.

He said, "Mike, you're just being negative!"

We remained friends, but I was sad to see him throw away that $10,000 and all the time he put into this.

Totally agree — I was recently approached by a guy who wanted me to integrate his feature (idea) into my product. Since I'm normally in the position of asking bigger companies to integrate my technology into theirs, it was eye-opening to see things from the other perspective. I found myself asking him the same questions that others ask me, and I could see how the answers I give might not be sufficiently convincing to my prospects.

Talking to other founders can be very enlightening, if a little depressing.

>"I think that idea is a mistake"

There is almost no idea that is a mistake. Barring some idiotic stuff like "tinder for my garden plants" (on second thoughts this might be good. maybe users want to cross breed plants?)

Twitter would sound obnoxious if it was pitched today. There have been more "snapchats" before snapchats (I think tigerchat). AirBnb was rent Air Mattress and then pivoted. Ebay was selling broken goods (started with a broken laser pointer). Everything sounds idiotic. Share my ride uber? Share my bedroom airbnb?

We are all sailboats in the river of life. And money is the wind.

I would really like to agree with this description because it does capture part of the human element of hearing someones dream, but it misses one key element of scenario. You're chatting with them as a friend, whereas it is part of a VC's professional responsibility to take a clear position with founders. Each pitch I hear is an investment of time – mine and the founder's. Neither one of us have much incentive to drag it out if it is really not going to happen.

One thing to note that may be non-obvious… Typically when I provide a detailed reason for the pass – regardless of if it's team, market, strategy, etc. – I don't exactly expect to receive the response "that's a great point we haven't considered, maybe it won't work out for us." Instead, I expect that the response will be a challenge to the point's I have made. Sometimes valid, but most often it comes down to a matter of perspective, but it is unproductive to engage in email debate with every founder where we don't pursue an investment in their company. It comes comes down to the tradeoff between professional responsibility and limitations of my time.

Yes, I was sloppy in using the term VC to refer to investors generally, my comments were more targeted at angels who I generally viewed as less explicitly professional in their investing profile. With a true VC at the seed stage, I would set the bar of professionalism at a prompt and explicit desision after the pitch and/or partner meeting. Anything less is a sign the VC firm is insufficiently efficient in its own processes to be agood partner. Later stage there is more data and a bigger check to write so I'd expect the decision to take a bit longer.

He left out an important one: sometimes VCs say no by saying yes. It goes like this:

VC response: We're really interested and we want to do the deal, we just need to wait to hear from partner X who is currently out of town.

Translation: We are about to fund one of your competitors, and we want to string you along as far as possible in the hopes that we can distract you from other fundraising efforts so that you will be less of a threat to our baby.

Comment: It's not a "yes" until the check clears. (And even then you should probably wait two weeks just to be sure.)

Yeah, the most successful business people you've never heard of will rarely if ever come out with an explicit denial (the ones you have heard of may also practice non-denial generally, but are playing by somewhat different rules).

Saying "no" makes people really mad. People remember how you made them feel, not necessarily what you said or did. Thus, it is most important to look after the feelings of the people you contact, even at the cost of saying or doing things disingenuously.

If you make people feel like you're interested in them and their ideas, that's much better than making an enemy who has sworn to prove you wrong. The best way to do this is to make them think you're 100% on board and that you're only being stopped by a technicality or some high-friction process that you're helpless to overcome.

Only a relatively small handful of people will eventually put two and two together and realize that you're intentionally stringing them on; most people prefer to believe the flattering interpretation that the deal is pending, it's just hung up somewhere along the way.

The reluctance of <AVERAGE_PERSON> to misrepresent things for commercial or political convenience only allows those with fewer scruples to rise to the top of the heap.

There is one that I got from http://www.pointninecap.com/

Their website states we "We’re based in Berlin, but we invest all over the world." but I got their rejection letter: "Sorry, We do not invest in India"

Apparently, India is out of this world.

My startup is registered in Silicon Valley and I am not even an Indian resident or citizen.

Maybe they assumed you're Indian based on your name?

But then again, this doesn't give them excuse.

Yes. And I didn't want any investment from them either. I just wanted to catch up to hear how their AI companies are working out.

Hah, playing the player.

That's a both clever and dirty trick. But unfortunately, few businessmen care about ethics.

Recently there was a post on HN about the reasons you should have a start-up. I wonder if starting a startup always requires these sorts of "Social Engineering Hacks"?

Good one. I'll add it.

I learned this one the hard way.

Most of these basically bucket into "I'm not interested" or "I'm not interested at this time, but I think that might change in the mid-term future."

Why are there so many ways to say No? Because just saying "no" is rude -- although some of the 15 alternatives in the Medium post are even worse because they waste a founder's time. It's like if a recruiter reaches out to you: most people don't reply, or they reply with something like "sorry, this is not a great fit" or "I'm not looking at this time."

FWIW, there are many VCs (though probably not the majority) that give concrete reasons when saying No. When I got into venture capital 5 years ago, many peers told me to be vague in order to maintain option value in a company's future fundraises. That sounded dumb to me because if I were a founder I would want feedback, so I try to give useful feedback when I'm passing. That's worked out well over time, and founders whose companies I passed on often introduce me to other founders, or reach out when they're fundraising again.

I don't like the tone of this piece.

It makes it sound like all startups out there have a RIGHT to be funded, and annoying, idiotic VCs just say no them... how mean of them.

But plenty of startup ideas are BS, plenty of founders are incompetent, and they don't automatically deserve a VC's ear, let alone their money. Why do they think they have the right to an audience? I know that you can have exceptions (Harry Potter was rejected by some 12 publishers before Bloomsbury took it), but if no VC is willing to even listen to you, consider that you are the problem, and not the VC industry.

I know that a bit of boundless optimism on behalf of the founders is needed for startups to succeed, but exercise that optimism in your own time and on your own dime.

I wonder if part of this tone is attributed to the culture of seeking permissions that VC's have in part smartly funded to create through their marketing and reach.

Want to innovate? Get VC blessing and money.

Want to create something? Get external validation first from a funder.

Even thought the vast majority of startups are self-funded, the mindshare of VC messaging in the space is dis-proportionate.

This leaves a real question, if getting funding is about leverage, getting some traction and revenue first is not a bad thought. It's really nice to see YC being a beacon of support in this regards too.

No one deserves money. The predominant VC culture doesn't deserve the right to shoot down people by stringing them out, or making them feel they aren't adequate, when no one is. Ideas are rarely good in the beginning and need time to form and develop like the entrepreneur... but the idea that you can't get anywhere without funding is a big fallacy. A word like deal flow on the wrong kind of VC's lips is cringeworthy.

Even learning to get good at freelancing, contracting and consulting teaches you enough business skills that are transferrable to most startups, not to mention being able to make some amount of seed money that would be available through funding.

I wouldn't say this about YC because they have a true founder support culture to go with the value add from leadership. I really hope this model of funding and investing in the person over the idea spreads widely.

The best funding and validation is from your clients. Scaling and growth funding is much easier to find.

Exactly. Someone has to tell the founder of "Uber for vegan dog food" that they have a shitty idea.

Sometimes its harder to crush someones dream than to just lie to them and not respond to their emails later.

No VC wants to become famous as the VC who said no to the next unicorn. That's another reason they don't explicitly say no. A 'no' is not a judgment on your whole existence, and it's mostly not personal. It's a judgment on your current state.

But most people don't say it that way. They go all "See mom you didn't believe in me but I told you I'd become something".

Well your mom didn't believe in you because you were smoking pot and failing all your classes when you were 16 and had half a foot in prison. Good for you if you managed to turn your life around but don't blame mom for her lack of confidence.

To me it sounds like all these responses are from people who need a backbone and just tell the person they aren't interested.

Yeah, I was kind of shocked at the level of entitlement displayed here. Pitching VC's is just like any other sales process, and its not uncommon to have a low hit rate, even if you have a good idea.

Shocker: most VC's will have a very different conversation with you if you've put a little time into building the relationship before you ask them for money!

Most VC's success stories go something like "oh yeah, I met this crazy person, and they just kept at it, and at some point I was convinced and put money in! Now its AirBnB!"

AirBnB couldn't convince Fred Wilson of Union Square Ventures to invest in two attempts and despite PG pleading with him.

Most of their early success was in NYC yet that didn't stop Sequoia from funding them. Now Wilson keeps a box of their "Cap'n McCains" cereal in the board room to remind him.

I got some good advice in 500 a few years ago when trying to raise a Series A. We were getting the "location" excuse over and over. It usually went something like, "we love what you are doing, and we would probably invest in you, but your location is a non-starter for us." The truth, as was illuminated to me during, is that they just aren't interested. If you were a compelling enough business for the investor, your location would not be a factor. If you can prove that you are succeeding in your location, then the location obviously isn't an issue. Too many investors saw our location as an easy out, and it took a while to understand that. We had way too much hand-wringing about upending our families and moving to the Valley to try to secure investment, when we should have just been looking inward at our own shortcomings.

it's only an excuse if you moved your company to silicon valley and it turns out they were lying and still didn't want to invest.

As it is you got a hard "no, because of your location."

I am shocked that you think location doesn't matter and that it was not the truth.

whoever advised you of that is wrong. of course it matters. why do you think more deals happen in silicon valley than elsewhere? because there are no good startups elsewhere?

shockingly misinformed/in denial. you should have believed the reason you were very clearly given. or falsified it by moving to silicon valley. or realized that actually, you are the one saying no.

I also cannot fathom the reason this comment got downvoted. I would be happy to hear about the reason.

I can't believe this was downvoted. If a VC has 27 portfolio companies in silicon valley and 0 based outside of it, for example, how is it an "excuse" if they tell you they want to invest in that geography?

The most frustrating no I've gotten, repeatedly, is "We'd love to get in on this as soon as you find a lead investor".

Translation: We don't really believe in your idea or you, but if you get a big player to put some money in we'll be happy to follow them.

That is not quite what that means. Usually that means "We kind of like your idea/team, but we don't have the technical resources to fully diligence it (or manage the board after funding), so we want to wait until someone more competent is willing to take a risk on your company".

> Translation: We don't really believe in your idea or you

If they're willing to invest a small amount of money it means they think it's interesting and they'd like to basically 'bookmark' it by putting up a small amount of capital in order to receive your company updates and have a small piece of the upside if things go well, but they don't have enough understanding of the product or conviction that it will work to drop everything and make a huge investment in it. And I don't think that's a bad thing at all.

E.g. there are a lot of folks who own a few hundred bucks worth of Bitcoin, so is it wrong that they haven't yet invested a large portion of their net worth into blockchain/crypto? I don't think so, I think it just means they're dipping a toe in the water and trying to get a feel for what's going on.

Yes this is probably the most common one I've seen.

"We'd be in for 300k if you can find someone who leads at 500k," or something like that.

Ohhhh, that's a good one. I'll add it!

When you raise a round >$500k, talk to potential lead investors before anyone else. Defer all conversations with investors who do not lead. Ask investors before taking a meeting if they lead. If they don't or say that do and still pull that shit, immediately disengage.

Alternative translation: We believe in your idea, but have a small fund and cannot take up the majority of your funding round. Thus, we would love to invest a smaller amount as part of a syndicate.

Why not be willing to lead then?

"Lead" implies taking the largest position in the round, often but not always around 50% of it. VCs typically have a strict profile for the size of check they write -- though I think this is more prevalent at the seed stage, where funds top out pretty quickly at fairly small check sizes. I think the dynamics are probably very different from this at later stages, but then again the article (and all this discussion) is about seed funding, as far as I can tell.

The reason VCs say no 'without saying no' is because they would like to keep the door open in case you and your crazy idea - against all odds - succeed and need a follow on investment a while from now.

The reason they say no to begin with is because you are not pitching in a vacuum, you are pitching together with another 1,000 or so companies in a year, 900 of those will get 'no' right off the bat, 100 will get a meeting (or two) dedicated to reviewing their proposition in more detail, 10 of those will enter due diligence (at substantial risk to the VC in case the deal does not go through) and maybe 8 out of those 10 will get funded.

The amount of time wasted on worthless pitches by people that don't stand a chance of getting funded is very large, and no amount of feeling that you are entitled to funding is going to get you funded unless you manage to convince the other side of the table that you are one of those 10, which means you need to look better than the other 990. Good luck!

> 10 of those will enter due diligence (at substantial risk to the VC in case the deal does not go through)

What exactly is the "substantial risk" that VCs take on by doing due diligence on ten companies a year?

DD isn't exactly cheap. And neither is partner time, that's probably a more precious resource than money at your average VC.

A failed DD says as much about the VC as it says about the company, it more often than not translates into 'VC didn't do their homework', and it can really eat into the '2' of the 2 and 20, those DD costs will come straight out of the operating capital of a fund. Especially for smaller VCs this can really hurt.

Thanks for the detail. To me, that sounds like the cost of doing business as a VC, more than risk. Forgive me if I have a little less empathy for the other side :)

Well, I see both sides. VC is not the money printing machine that many people make it out to be, lots of VCs work hard, take tremendous risk and in the end end up with relatively little to show for all their effort.

2% of the capital under management is a lot when a fund is large but when a fund is small (say 50M) it translates to 1M of operating capital for a year when all capital is invested. That's only the case at the end of the fund cycle, the time before then there will be on average only half of that available. If a full process DD (legal, commercial, technical, financial) costs $200K then even a single failure will substantially eat into the operating capital for that VC and may in fact harm their ability to do future deals.

Not having empathy for the other side is not very productive, either from the VC's point of view or from the point of view of the start-ups. I've seen more start-ups that try to play tricks than I have seen VC's (but I've seen both).

Got it. Thanks :)

What is VC due diligence like?

Essentially they will build a hypothesis around what makes your company worth investing in (e.g. great goto market, passionate customers, technology likely to be bought, ...) and will focus on double-checking what they believe needs to be true for that is actually true. Essentially it's broken down into:

Technology due diligence (by an outside contractor)

- understand architecture

- interview CTO

- understand technology choices

Essentially the technical DD is whether your CTO knows what they he is doing and can actually deliver the roadmap.

Go-to-market DD

- call with your channel partners if you have them

Product DD

- call with a sample of your customers

- Actually try the product themselves

Team DD

- reference calls on all founders + backdoor references

- CV's of core team

Business audit

- P&L

- cashflow

- cap table

- sales activity (growth, churn, acquisition)

Due Diligence should not raise any surprises and confirm what you have pitched them. It's a very rational thing to do before you wire a few million into a company you have met only a few times.

> Due Diligence should not raise any surprises and confirm what you have pitched them.

This is key and something that I have explained multiple times over the last couple of years to people that really did not get why a surprise or two during a DD were a 'big deal'. DD is confirmatory, not discovery.

I think it depends on the fund. Jonathan Hsu of Social Capital wrote a 5 part blog post on how they do it [0]. They even built a tool that companies interested in pitching upload their user & revenue data into, it's pretty neat.


Gave a presentation to an analyst at DFJ. Showed her an alpha prototype. She said, very interesting, but we really wanted to fund <competition>. That other company was in a similar space, but did not have the product that we demoed. Then they got funded by DFJ and in 6 months, that company released an inferior clone of our demo. In 2-3 years they got acquihired by Google (the founders did not do very well judging from their subsequent LinkedIn jobs), and Google shut the product down. Our product grew bootsrapped and has been feeding us for 10 years, without making anybody rich, just comfortable.

Best "no" conversation I ever heard.

Us: how did you like our pitch?

VC: we're a no, because we don't trust your unit economics.

Us: fair enough. Could you please share some scenarios you've invested in where there were parallel unit economics to us? We'd like to understand what you know about our space and where those economics make sense to investors such as yourselves.

VC: certainly! We have an investment in <X> that's in your space, and their unit economics look great! The assumptions you have and the ones they have are about the same, but look at their margins!

Us: ummm, so that's a function of revenue/price that we don't believe is even feasibly attainable. Our margins are smaller because we think the per-unit revenue is going to be challenged. It's why our numbers are fairly skeptical.

VC: well, we believe they can reach that (unfounded) level of revenue.

Within a year, the company this group funded was raising a Series A to stay alive because -- drum roll please -- the unit economics were not panning out.

I say this is the best "no" because we had hard feedback on what worked for them. It also let us know they didn't really understand how price in our market space was going to have downward pressure. Our approach was to start very cheap, then improve over time. These investors weren't interested in that approach; rather, they went with the team who had "better margins".

We learned a lot, and kept learning, from this investor's "no".

I think the thing to realize here is that "no"s aren't personal.

Well, I mean, sometimes they are. But they're usually not. A $1B fund has roughly three years to allocate that $1B in resources --- that's nearly $1M a day. You need to make sure that the speed at which you're expected to invest doesn't detract from the quality of deals, so your bar has to be extremely high.

I think a valuable skill to develop as a founder is to recognize the difference between; "no, but I like you" and "no, and I don't like you / don't care." This industry is built on relationships. Unfortunately there will be a ton of people who just don't give a shit about you. But the ones that do, they're going to help unlock doors for you, and even if you get a "no", focus on recognizing real "clicks" with people.

There are two versions of this one:

"VC response: We’d love to get in on this as soon as you find a lead investor!"

The first is "talk to us when you have a lead". That's not helpful and it's bullshit. When you have a lead you can always raise as much money as you want - I do not contact these VCs back when I get a lead.

"We are 100% committed for at least $X00,000 if you get a lead or fill out the rest of the round" - very helpful, shows conviction, etc. This version is still not great, but look everyone can't be a lead, and having good folks 100% committed with $$ amounts shows a lead you have interest and will quickly fill out a great round around their check.

Don't do the former, only do the latter.


"Here's a test for deciding whether a VC's response was yes or no. Look down at your hands. Are you holding a termsheet?"

From http://paulgraham.com/guidetoinvestors.html

Best "No" I've heard recently: "Are you way too early this time? Because last time you were way, way too early."

The one that was missed is where the VC is really excited during the meeting, does more research after the fact, and then switches to one of the provided answers. In my experience, VC's don't do any research UNTIL they are excited.

Trying to recognize noes from investors strikes me an being a bad framework for thinking about business. Of all the investors whom I've asked if they'd like to receive an email update every time we add a zero to our core metrics, I've yet to have a single one say no. It's your job to make a good product with good economics, marketing, retention, etc., and to consistently grow your metrics. If you're not willing to actually do this and demonstrate progress on a regular basis then why would you expect anyone to fund your company?

Seriously, with all the new crowdfunding and ICO options, why fight to convince the gatekeepers like VCs when you can first try to convince some percentage of the population to each put in a small amount?

Because raising equity via CF only applies to projects that "speaks" to a subset of the general public.

Because raising equity via CF implies your deck of slides immediately end up in the hands of your competitors (I know that once you've started your roadshow you have to assume everything is public but you can expect a little bit of latency and/or release some information at latter stages).

Also, probably because I am only familiar with smaller investment/startup communities (Paris and especially Brussels), every information is traded between large investors (both funds and individuals) and once you're "in" you hear about "largish" rounds (or companies going out of business) by grapevine sometimes weeks in advance.

It's already hard enough to raise with noise around, it's hard enough to manage a business, don't get on a soapbox and reveal your strenghts and weaknesses publicly...

In France, lending CF is growing. I invested a few euros on one of the platform just by curiosity. They are mostly industrial companies looking for sub 500k loans to acquire/replace equipment. The rates are outrageous, up to 8%. You get a detailed market and financial analysis, you see companies 20 years+ old, with stable numbers, doing like 2 or 3M a year in sales. Why the hell didn't their bank lend them 200k at 4 or 5%? French bankers usually don't play their role anymore, which is lend capital, take some risks, and push good projects towards friendly VCs (I must say that we're very lucky/happy our banker has the opposite behavior :) )

> In France, lending CF is growing. I invested a few euros on one of the platform just by curiosity. They are mostly industrial companies looking for sub 500k loans to acquire/replace equipment. The rates are outrageous, up to 8%. You get a detailed market and financial analysis, you see companies 20 years+ old, with stable numbers, doing like 2 or 3M a year in sales. Why the hell didn't their bank lend them 200k at 4 or 5%? French bankers usually don't play their role anymore, which is lend capital, take some risks, and push good projects towards friendly VCs (I must say that we're very lucky/happy our banker has the opposite behavior :) )

Ex-banker here. 8% is not a bad rate for such a loan. Most banks, in the US at least, don't want to do term loans for equipment for small companies because the transactions costs are high (same amount of work for a $5m loan, often less), there's usually a customer concentration problem, the borrower is usually overlevered already, the asset recovery process is just as expensive as a larger loan, and the collateral liquidation values are low. So if you're an established, small industrial company a bank will gladly give you either a real estate loan or a line of credit at 4 or 5% collateralized by your receivables, but that's about it.

Edit: There are specialty finance companies that have sprung up in the past few decades that make equipment term loans, and their rates are 5-12%. There are also "hard money" guys lending at 15%+ to riskier borrowers.

Thanks for that very interesting comment.

Never thought of it that way but makes perfect sense. My view was distorted by the fact that my banker easily opens lines of credit for my company where the collateral is virtually non existent (SaaS startup). I compared that to industrial companies where, to me, assets are more liquid:a truck or whatever industrial equipment probably can probably be sold more easily at an auction than the software IP of a company. While true, I neglected the fact that the auctionned truck will go for probably 25% of its original value and the bank will not refer its funds...

My banker is not trying to earn something on our lines of credits, he is betting on the fact we will do a lucrative exit and that it will, in the end, be beneficial to him.

Just because a new method of running a ponzi scheme has not yet put anyone behind bars does not make it an OK thing to do.

Just because you're ignorant... You're allowed to make that comment :).

Also, you think all VC deals are fair and square? Naive.

Because I'd rather my cap table have three really well known people who can add a lot of value to my company other than money, like experience, advice and connections, then 1000 people who have a little bit of cash who may or may not be great evangelists for my company.

Also, crowdfunding only works with consumer products -- crowd funding a B2B product is almost impossible.

Usually you get investment from a single shell company whose shareholders are the 1000 investors and the CF platform (which often has golden shares)

Board seat(s) go to a representative of the CF platform.

So technically you don't have a long cap table but it's anyway not a good sign for next rounds so you're, in practice, right.

For instance what if the CF platform goes under? It's magnitudes of orders more likely than a VC...

> For instance what if the CF platform goes under? It's magnitudes of orders more likely than a VC...

The bankruptcy trustee that takes over the CF platform hires some third party to service all the shell companies. Could result in substantial additional costs to the investors or the company. Who pays depends on how much value is left in the bankrupt platform, what's in the contracts, the efficacy of third parties involved in the bk, and the whims of the trustee and the judge.

Because VC's are not gatekeepers? I'd love to get in on a round at the same time as a VC, but would definitely pass up on a startup which can't garner VC interest.

You pretty much described the dynamic of gatekeepers.

That's like saying "if an artist can't get a record label to sign them, I would also pass on them"... and now there are tons of ways to self-publish and crowdfund, including soundcloud and patreon and kickstarter!

It's hard out there. The crowdfunding platforms are not friendly places for early-stage web projects.. Unless you're famous. https://www.kickstarter.com/discover/categories/technology/w...

Of all the VCs I spoke with, ba16z was the best. They were proactive in reaching out (2nd3rd/4th+ teir VCs are lazy), they gave you a quick no, acknowledging their fallibility, and telling you why they passed. That said if you randomly email a VC and don't hear back, they're not obligated to respond. They get hundreds of inbounds each month and 99%+ are simply uninvestable.

How did you get their contact? Were you networked by someone?

They had reached out.

I have had a class in Negotiation and Conflict Management. If you haven't had any training in negotiation, at least get a copy of the book "Getting to Yes." It is short and research-based.

It takes time to broker a deal. (Of course, that doesn't mean every single person is being straight up honest with you every single time they communicate.)

This article kind of admits to being perhaps unnecessarily snarky. ("Note: I’m normally not this cynical, but this article was fun to write ") I don't have experience trying to woo VCs for an investment. But closing a big deal tends to be time consuming due to the slow process of gradual exposure of pertinent info on both sides.

So, I am reluctant to take this article too seriously.

There are a bunch of variants for B2B as well:

"We see you have X reference clients, and usually like to see X+2 reference clients"

"We'd like to see you get a little further along in terms of product/market fit, and then let's talk"

"Let me circle back."

the worst

Having never been around the West Coast tech scene much, it sometimes seems that there is almost a tacit expectation that someone "owes" you money for your idea. Without commenting on whether that is "bad" or "good", it's just interesting to compare it to the attitude most of the people I know who start businesses on the East Coast who would find it at least odd if not right outlandish that someone would give you money before you demonstrated in some concrete way that you have the ability to tender it back with some form of interest.

I don't know about the entitlement you describe, but isn't getting in on a startup more about 10x payouts instead of incremental "interest" payouts? I can only imagine a VC is not interested in a concrete demo of marginal profitability, and would prefer a pitch for some disruption that has some worthwhile chance of success.

Different types of investors attract different types of entrepreneurs would be my guess to explain the difference you see.

It's not just VCs. Over the past three years I've noticed that more and more people in general are giving "positive sounding words" instead of a yes or no. Designers, developers, writers, business people, from every part of the world.

The best people I've worked with have always gotten back to me right away with a concrete yes or no. I do the same, anything else is a waste of time. As soon as someone starts giving me anything like the responses in the article I move on.

It's the California No. Look it up. It's well-known and endemic in the Bay Area and Hollywood, in particular.

My personal annoyance is how prevalent it is in dating now, given the number of people who respond violently to rejection (thereby training people to avoid dishing it out). I gave this serious thought and realized I'm 100% on California No style rejections ever since moving here, while in other places I've lived I'd get "sorry, I'm not interested," or something similar.

California No creates ambiguity -- do I continue asking? Did this person get hit by a bus? If you think you're doing a favor by avoiding saying no, you're not. Say no. Every time.

Dating is very different, I wouldn't pass judgment. There's a real risk of physical harm at every stage. If you're unsure give 'em one more "I'd love to hear from you." before deleting their contact info and moving on.

In my experience, even one followup is risky after a California No, your specific wording doubly so (I've received "why don't you take the hint" to a single, very similar, followup the next day). I no longer follow up and tend to follow a policy of never asking for business or personal asks over text-based media, because a California No is harder to pull off in person. It evolves in person, though, to a "yeah, that would be fun, let's do it sometime" (and the examples in the article) to buy time until the California No can be successfully executed. I did mention the physical harm and am aware there are a growing number of folks who react violently and offensively to being rebuffed by internalizing it and taking it personally -- I know this because I've had to make conscious efforts to not tie rejection to my self-worth (I've been guilty in the past), and I've repeatedly seen rejections turn very, very ugly. So I am sympathetic that folks are often trained to -j DROP instead of -j REJECT.

Also, the situations are strongly related. It's a general theme of being unable or unwilling to say no, whether in business or personal relationships. It transfers the ambiguity of the situation to the asker: are they saying no? Did they lose their phone? Did the e-mail go to spam? Did the investor's mom die? Am I being too persistent by following up? This must be balanced against feeling entitled to a response, though, because nobody owes you anything. It's a fine line.

My personality type strongly prefers closure, and open issues like this nag me incessantly through no control of my own. I literally lose sleep over California No, trying to think of the explanation, whether business or personal. I cannot control that despite much effort. Was it something I said? Then I replay the entire conversation in my head. Then it's 4AM. The next generation is already learning that it's normal, and those of us who like (nay, need) "no" are now the diminishing minority.

I'm surprised to learn this is such a common thing that it has a name "California No", and it also reminds me that there is something wrong with the people of California :)

In my experience, someone who can't say no is not being polite; they are being quite rude. Stringing people along is rude. It is far more polite to outright tell someone that you are not interested and then everyone can move along. Even for dating, I can't speak for other people, but a simple "not interested" is more polite than being ambiguous. There is no "growing number" of folks who react violently because violent reactions, in general, have decreased over time -- and if anything, a clear "no" is likely better than being unclear. In my experience someone would be more angry at being misled over a period of time.

You seem judgemental. While I share the same preference for clear, open discourse as others here, I recognise that in some cultures (e.g. Japan where I live) I will be in a distinct minority in this regard. It's only as polite or as rude as cultural norms dictate.

I think a good approach is to recognise the different styles and, where appropriate, to help your counterparty to do so too.

> There's a real risk of physical harm at every stage.

This is vastly-overinflated risk, and honestly part of the mess we're in is due to people treating suitors as potential rapists or axe murderers.

> If you're unsure give 'em one more "I'd love to hear from you." before deleting their contact info and moving on.

This sort of brush-off means that a) you're going to be surprised when they show up again and b) they're definitely going to be more annoyed when they find out you ghosted them.

If you don't treat others with respect, it makes things worse for everyone.

> This is vastly-overinflated risk, and honestly part of the mess we're in is due to people treating suitors as potential rapists or axe murderers.

Being careful who you socialize with is smart no matter what.

> This sort of brush-off means that

I wouldn't call it a brush off, it's an invitation to respond (or not) without further pressure or expectations.

> a) you're going to be surprised when they show up again

Yes! Delightfully surprised!

> b) they're definitely going to be more annoyed when they find out you ghosted them.

I've never had a bad experience with it. Most people who do decided to get back to you after an extended absence have a pretty good sense of humor about the situation. Ghosted is the last thing I'd feel if someone's last message to me was "I'd love to hear from you!"

> This is vastly-overinflated risk

I don't think it is. I don't know a single attractive woman who hasn't been physically abused by at least one of their exes.

The "attractive" qualifier gives the whole comment a bad smell. Physical abuse is physical abuse and it tells you more about the abuser than the abused.

I haven't gotten to know the unattractive ones well enough for them to tell me their romantic history. But yeah, I bet a lot of them get abused too.

So how do you know when you get a Maybe? Every time you do not get a yes, does it mean you got a no?

I have contact some VC using emails and showing my MVP. Usually they ask some questions, or give some advice. Sometimes they say No, but for now... Other times they said that it is not a fit for us. One of them say that we are in a different country and that he preferred to talk in person.

> VC: Thanks, but this isn’t a fit for us right now. Let’s keep in touch.

I don't see what's wrong with this. It's a clear no without slamming the door on a future investment should the scenario change. If the VC would say "VC: Thanks, but this isn’t a fit for us ever" that would be shortsighted.

Is it a pretty safe bet to say if VC-s are not calling you asking to invest, there is little chance you'd get them to invest by calling them.

Also there 0 downsides for them just stringing you along as other pointed out. "We are totally interested, lets see your details blah blah" then pawn you off to Hayden.

> Is it a pretty safe bet to say if VC-s are not calling you asking to invest, there is little chance you'd get them to invest by calling them.

Emphatically no. Nobody's radar is that good. Waving a hand to attract some attention directly works, if you have something to back it up.

I've experienced at least two of these responses in the last few months. Your write up has confirmed some of my suspicions. Tying to raise funds is hard! Luckily I have enough saved for a six month runway, that will get me to beta and hopefully a yes on some venture capital. Thanks for sharing.

So funny to read and so true. Moral of the story, best money to secure is the one from customers. Much more difficult to get but so rewarding and the types of answer we get from prospective customers does not exceed 3.

Well, statistically whatever the VC is saying, it means "no".

In my experience, everything but "yes" means no.

I never got this business in business. If your idea is really good, then you don't need to ask for money.

Everything short of seeing the money in your bank account is some version of "No."

Now get back to work!

My shortened version of the answer to this topic: if they don't say yes, it's no.

Why not just say "no"?

In my experience, some would just never come to Terms and just 'ghost'.

Im curious, are there serial pitchers? Round after round of "nos"

This is so painfully accurate.

Here I consider just early stage information technology VC -- later stage and bio-medical can be much different.

Yup, from my experience, the OP has what a lot of VCs do.

One thing for an entrepreneur to do is to read some remarks from a VC or their firm about what their interests are. Then, when their interests well cover my startup, I write them and explain how their interests cover my startup. So, sure, I rarely hear back with anything and otherwise nearly always just as some in the OP.

So, then I get pissed: (A) They said what their interests were; (B) I wrote them showing how their interests covered my startup, but (C) they ignored my contact. Bummer. So I used to, sometimes, wait a week or two and then write them and say that they were so unresponsive that there would be no way we could work together successfully and stated that I withdrew my application.

Since then, in part I wised up. By process of elimination, I began to conclude some basic facts about VCs.

(1) Mostly their stated "interests" don't much matter.

(2) They actually do have some interests and these are nearly universal across VCs and their firms: They are interested in traction, significant and growing rapidly, especially in a large market.

(3) Really, the situation is essentially as in the old Hollywood line, "Don't call us. We'll call you." Or, really, VCs want to learn about the startup from existing buzz, virality, etc. They want to see the product/service, play with it, and try to estimate how successful it will be in the market.

(4) For a first step, for a VC, (1)-(3) is about all that matters.

Actually, (1)-(4) seem to be so astoundingly uniform that they must have some common cause. My guess at the common cause is the larger LPs, e.g., pension funds; they insist on (1)-(3).

For me, I'm a sole, solo founder, toilet cleaner, floor sweeper, ..., computer repair technician, systems administrator, ..., programmer, user interface designer, data base administrator, software designer, product manager, CTO, COO, and CEO with a tiny burn rate. Some venture funding could have made some of the work go faster, but really I haven't needed venture funding and don't really need it now.

But with all the above, there is a surprising situation: My burn rate is so low that I can continue self-funding until my Web site is live. Then, if users like my work, soon I'll have enough revenue from routine efforts running ads that I will have plenty of free cash for organic growth without equity funding. If I get that growth, then I'll have a life style business with, again, plenty of free cash for more organic growth.

About that time, some VCs will learn about my startup and give me a call. They will expect that my company has about five co-founders, each with maxed out personal credit cards, has a business bank account close to $0.00. They will assume that the company and each of the co-founders is just desperate for an equity check on just any terms, say, because each of the co-founders has a pregnant wife. Then the VCs will believe that they can play hard to get, strike a hard bargain, and grab control of my company for next to nothing.

At that time I will check my computer, confirm the name of their VC firm, and let them know the date long before when I sent them a description of my company they ignored. So, I'd inform them that they were too late, that my plane has already left the runway, and no tickets were for sale.

So, now sometimes I write VCs just for fun, so that if my startup does work and they do call me, then I can tell them that I wrote them and they ignored my contact!

To me a biggie point is that apparently the VCs want nothing to do with any business planning, crucial core secret sauce technology, etc. To me, such things are the keys to the big successes the VCs must have to get the investment returns their LPs have in mind to invest in VCs. Further, such planning, special technology are the keys to the many amazing technology successes of US national security.

Well, again, apparently VCs want to wait for traction significant and growing rapidly. Maybe that approach will usually be okay for VCs: At least apparently the VCs believe that on the way to a big company, a startup will nearly always need some equity capital.

But for a sole, solo founder with a tiny burn rate and writing software, the VCs can miss out: That is, by the time the VCs want to invest, the founder will no longer want or need the investment.

A big example of such a sole, solo founder success was the Canadian romantic match making site Plenty of Fish.

In the last few years, for early stage, information technology venture capital, the situation has been changing radically:

A blunt fact is, that the VCs very much need big wins, commonly, say, 30% ownership in a company with exit value $1+ billion. Moreover, even more seriously, to get their limited partners (LPs) excited, they need some ~30% ownership in another Microsoft, Apple, Cisco, Google, or Facebook. That's just the facts of life. To pass the giggle test, that's the game they are playing, the business they have chosen.

We need to keep in mind, beyond Moore's law and the Internet, the examples Microsoft, Apple, Cisco, Google, or Facebook don't have a lot in common. So, we can't hope to extract much in the way of predictive patterns by just external empirical observations.

So, if VCs or anyone is to find another Microsoft, ..., Facebook, they they will have to look deeper than just patterns from external observation.

Also we should keep in mind, say,




on the average venture capital return on investment. One word summary, the average return is poor, not high enough to excite LPs.

Here is a hint at the nature of the radical change: At


Sam Gerstenzang, "The Happy Demise of the 10X Engineer"

with in part

"This is the new normal: fewer engineers and dollars to ship code to more users than ever before. The potential impact of the lone software engineer is soaring. How long before we have a billion-dollar acquisition offer for a one-engineer startup? "

So, a solo founder building a company worth $1 billion?

Of course, there is half of an example -- the Canadian, Internet based, romantic matchmaking service Plenty of Fish with a solo founder, with two old Dell servers, $10 million a year in revenue, all just from ads from Google. He added people and sold out for $500+ million. So, his ~$500 million is half of the $1 billion A16Z mentioned.

So, what are the causes of the radical changes?

(1) Cheap Hardware.

From any historical comparison, within computing or back to steamships, now computer hardware is cheap, dirt cheap; transistors are cheap; so are compute cycles, floating point operations, main memory sizes, hard disk space, solid state disk space, internal data rates, LAN and Internet data rates, etc. Dirt cheap.

(2) Infrastructure. It used to be that an information technology startup could expectd to have to build or at least wrestle with lots of infrastructure. Now quite broadly, getting the needed infrastructure is much easier and cheaper.

So, nearly any room in the industrialized world with a cable TV connection can be a quite active server farm because the rest of the infrastructure, to a local Internet service provider, a static IP address, a domain name, and plenty of Internet data rate for a quite serious business, is right at hand.

Of course, the big quantum leap in easy infrastructure is the cloud, from, say, Amazon, Microsoft, etc.

(3) Software. Now software is much easier. There is a lot of open source software, excellent software for quite reasonable prices, etc. And really it's much easier just to write new applications level software. Web pages, graphics, database operations, algorithms, etc., all are much easier.

So, with (1)-(3), a solo founder with a good idea for a startup to be worth $1+ billion can for darned little cash write the software, bring up the idea as a Web site, run ads, get publicity, and, if users come, get good revenue.

It's easy to argue that at current ad rates, a server costing less than $1500, kept busy, could generate monthly revenue $200+ K for investment by the founder of basically just their own time. Such a solo founder with that revenue, then, will just laugh at any suggestion that he should take an equity check, form a Delaware C-corporation, and report to a BoD. Instead he will just form an LLC and remain 100% owner.

Then, the main issue now is the evaluation of the basic idea of the sole founder. Or if the idea is really good and VCs wait until there is traction significant and growing rapidly, then the VCs will be too late. Or, the solo founder wrote the software, has one server from less than $1500 in parts connected to the Internet, has a static IP address and a domain name, has done and is doing some publicity things, and otherwise is running the business each month for not much more than pocket change, for less than a lot of people spend on McDonald's or pizza or Chinese carryout. Literally. So, the founder's startup is just dirt cheap to run. If enough users like the site to keep the server busy, then the founder is getting maybe $200 K a month in revenue, plenty to grow the size of the server farm, and in a few months buy a nice house, for cash, put several nice new cars in the garage, for cash, and spend a hour each afternoon in the nice infinity in-ground pool. Then a VC calls and wants to invest $10 million for 30% of the business and have the founder report to a BoD of a Delaware C-corp. -- we're talking LOL.

Does that situation happen very often yet? Nope. But now it is just such situations that the VCs desperately need in order to get a significant fraction of ownership in $1+ billion exit values.

Or, put very bluntly, the VCs desperately need really exceptional startups. For Microsoft, ..., Facebook, there are no visible patterns. The founders no longer need big bucks for a team of developers, expensive servers, and communications data rate.

Net, for the projects the VCs must have, by the time they want to invest according to their old rules, a solo founder with a good idea has already got plenty of revenue for rapid organic growth and a life style business and won't accept an equity check.

Again, so far there are not a lot of examples of such solo founder startups, but the radical change and the big deal for the VCs is that it is just such startups that stand to be the exits the VCs desperately need. So, for the next Facebook, etc., by the time the VCs call the founder, all they will hear back are laughs, and the VCs will have to push back their chairs, think a little, and realize that they just missed out. The VCs will see that, really, there has been a radical change and they must make some radical changes or just miss out and go out of business.

So, finally we discover that the core idea is what is just crucial because for a good idea a solo founder can do the rest alone for essentially just his own time as the investment. So, to evaluate startups, must evaluate the idea at just the idea stage and just hope that the founder will accept a check.

Boo hoo hoo, bad daddy not giving candy when asked...

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