Posts tagged Entrepreneurship
What a VC is Really Thinking when Turning Down Your Startup
Yesterday, my post went live on VentureBeat discussing the top 25 ways your startup will be turned down during fundraising.
Most times, however, what an investor says is just scratching the surface of how he/she truly feels when declining to move forward with your company. Many more factors are inputs into their decision process (that have absolutely nothing to do with you or your company) including:
- Past Experience
- Their Partnership
- The Market
- Their Investors
- The Fund
- Industry Thesis
- Potential Internal Politics
- Personal Situation
- Etc.
The VC job is incredibly hard one: being tasked with finding the diamond in the rough amongst many somewhat shiny rocks.
After receiving several messages from investors pouring into my ShopWell email, I got this wonderful summary from a Managing Partner from a very well respected firm (who asked to remain anonymous). He nicely summarized what a VC would love to say to entrepreneurs (based on a VCs internal dialogue). Below is his artful response:
It’s not that I don’t like you, your team, your idea, your technology, your deal terms, your stage, your positioning relative to your competition, or your exit prospects. To the extent I understand them. Which I don’t really yet as we have only spoken once. It is that our venture capital partnership is based on trust, and one of the deals that I had blow up on me in the past, which I had personally convinced my partners to do, had a similar trait as something in your company. I cannot tell you if it is similar to something with you, your team, your technology, your deal terms, your stage, your positioning relative to your competition, or your exit prospects, as then I would be revealing to you something about one of my failed investments of which I would rather repress the memory. But it was one of those. And the thing is, if I try to push your deal through my venture capital partnership, having already lost our investors’ money because of a similar issue as the one of the table, and if I lose their money again, then I will not have the credibility to bring other deals to the investment committee for approval. For ours is not a 3-strike business, it is a “fool me once, fool me twice” business. My ability to bring the next Facebook or Google to them will have been lost. Now I know this is not your fault, and in fact this situation might be completely different, but it is close enough that, in the scheme of things with respect to my entire firm and the way we do business, I just cannot take the added risk.
Entrepreneurs. Above is the real reason for 95% of the rejections. You should not take any rejection as a true rejection, just as an indication that there is a better fit out there somewhere else. Keep fighting the good fight and don’t stop your quest to change the world.
This video illustrates two start-up guys throwing around random web marketing buzz words. Super hilarious…but makes me feel a little bad for the guys who have to listen to pitches like this all day long.
You know your an entrepreneur when you steal office supplies from home and bring them to work…oh wait, that assumes that those are two separate places.
Whoever said that being an entrepreneur was glamorous must not have been an entrepreneur.
You’ve either started a company or you haven’t. ”Started” doesn’t mean joining as an early employee, or investing or advising or helping out. It means starting with no money, no help, no one who believes in you (except perhaps your closest friends and family), and building an organization from a borrowed cubicle with credit card debt and nowhere to sleep except the office. It almost invariably means being dismissed by arrogant investors who show up a half hour late, totally unprepared and then instead of saying “no” give you non-committal rejections like “we invest at later stage companies.” It means looking prospective employees in the eyes and convincing them to leave safe jobs, quit everything and throw their lot in with you. It means having pundits in the press and blogs who’ve never built anything criticize you and armchair quarterback your every mistake. It means lying awake at night worrying about running out of cash and having a constant knot in your stomach during the day fearing you’ll disappoint the few people who believed in you and validate your smug doubters.
I don’t care if you succeed or fail, if you are Bill Gates or an unknown entrepreneur who gave everything to make it work but didn’t manage to pull through. The important distinction is whether you risked everything, put your life on the line, made commitments to investors, employees, customers and friends, and tried – against all the forces in the world that try to keep new ideas down – to make something new.
Launch Early Enough To Be Embarrassed By Your Creation. You’ll probably be wrong about most of of your thesis, and you might as well get the feedback. Perfection is a myth. Get it into the mix. Don’t undervalue the importance of time.
Most entrepreneurs I know do it because they want to, not just to get rich.
At the foundation of every great entrepreneur is some degree of irrational exuberance.
How Great Entrepreneurs Think
Think inside the (restless, curious, eager) minds of highly accomplished company builders.
Although I don’t know if I completely agree with the findings, a clever post by Inc. Worth the read.
It’s a scary realization, that as an entrepreneur, the most relaxed you feel is when you are working and the most anxious you feel is when you are trying to relax.
If you aren’t getting rejected on a daily basis, your goals aren’t ambitious enough.
