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My least favorite VC behaviour? (asack.typepad.com)
40 points by dwynings on July 1, 2011 | hide | past | favorite | 14 comments



A common (although I haven't seen it) but also lame VC thing is for them to say "No, we don't want to invest, because ..." where "..." is some random reason which sounds plausible and is non-confrontational ("we want to see more traction") vs. the real reason ("we think your team sucks", "we like a competitor more", "we don't actually make new investments, since we couldn't raise another fund").

As many have said, believe the No, but not anything that comes after it.


And then, when your company gets some serious press/traction/money they usually call you back again acting like best friends who always thought you had a great idea.


Maybe one should make it clear that if they don't take you up on your offer now, they won't have the opportunity to do that later.

Obviously this should only be done with second rate firms, but since most deals don't make them any money they cannot afford to miss the few which do make money.


With VC's you always have to consider the possibility that they have already funded a potential competitor, and that they are actively but subtly trying to hinder you in order to help that competitor. You even have to keep this possibility in mind after they have funded you, because they may view writing you a check as simply a cost-effective way of keeping you under control.


Don't VCs publish lists of the companies in their portfolio?

The first part is sensible, the second part sounds a bit paranoid. I've never heard of a VC funding a company that competes with another one in their portfolio, just to sabotage it.


> Don't VCs publish lists of the companies in their portfolio?

Yes, but only after they make the investment. If they're still in negotiations you generally won't know.

> the second part sounds a bit paranoid. I've never heard of a VC funding a company that competes with another one in their portfolio, just to sabotage it

I confess this is pure conjecture on my part, and it would be pretty farfetched for a VC to make a major investment for this purpose. But many VC's have seed funds now. For $100k they can buy an awful lot of influence at an early stage company, and the interests of that company may or may not align with the interests of the VC's overall portfolio.

The chances are small, but I think not completely discountable, especially in cases like the one described by the OP.


I think it would make more sense to say that they have a different potential company with a better price tag to spur a more 'competitive deal' even if none exists.

A similar tactic of introducing competition when none exists is used by real estate agents most if not all the time I hear. "Oh, there's an interested buyer that's willing to pay $2000 more than your offer for this property." It's a scam that preys on what the buyer wants. Hint: Bluff back "My offer has dropped $5000. No? I'll look at other houses then."


From my understanding, VCs don't like to decline so that they don't close any doors. They may not want to fund at the time, but may jump on it later.


The way I look at it, a respectful decline is far more likely to leave me open to working with them if they reconsider. Leaving someone hanging isn't leaving the door open -- it's standing them up. It's a huge "fuck you".

"We think you have potential, but we think you're too much of a risk right now. We'll talk later when you have more traction" is perfectly fine, and I would be glad to work with someone who told me that. Silence when I try to contact someone is simply a way of saying "I'm an unreliable douche."


They're very busy people, whose attention a lot of people want to get a piece of, and don't always have time to answer every email they get. As someone who spends 3+ hours on answering email per day, and doesn't always get to all of it, I can sympathize.


If they have decided they had enough time to call and arrange a meeting, as is the case of the author, they should certainly find the few minutes necessary to send an email with their decision.


Do they any make an effort to leave the door ajar?:

"We'd like to back you, but we need to see more traction before we can. Come back when you have enough to make funding merely a bold move (by VC standards) and less of a leap of faith, as based on objective milestones."

That plus a few revisions. Has anyone seen this in the wild?


> Has anyone seen this in the wild?

It's practically a meme:

http://d.pr/nJpH

EDIT: Tracked down the Tumblr where I saw that slide:

http://bryc3.com/post/172703130/i-ganked-this-slide-from-joe...

Slide text:

  How VCs Say "No"

  - <strike>"No"</strike>
  - They don't return your calls or emails
  - "We love what you're doing but would like to see more progress"
  - "We'd like to see what your beta looks like"
  - "Have you thought about hiring a _____"
  - "Have you thought about approaching _____"
  - "We're interested, but we don't want to lead."


Another favorite line is, "You're a bit early for us" and ask you to keep them updated. AKA if you start to explode they'll open their checkbook.




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