Getting to NO!
Sometimes, getting a VC to say "NO" is the hardest thing in the world.
Raising money for a company can often be a frustrating exercise. You get to present to a VC and the meeting seems to go well. Afterwards there is little or no feedback and generally stony silence when trying to reach the VC for feedback. True, VCs are busy people but the absence of feedback is probably the biggest frustration an entrepreneur can encounter. Ah I hear you say, the silence in itself is feedback that the VC is not interested and that may be true – but it doesn't answer why.
The military have a phrase that runs like this – "Never be first, never be last, and above all, never volunteer!" – the explanation behind the VC's silence is a modification of this – "Never be first, never be last and never, ever say NO!". To say NO locks you out of a deal while silence keeps the option open. If the company gets traction with other VC's, the ones who go radio silent often pop their heads back up, now afraid to miss out on a good investment.
In all the years I've been in the VC business I've tried to give entrepreneurs direct and candid feedback about two things – a) their business proposal and b) my interest level. Not all investment opportunities are a fit for every VC. Some VCs focus on a particular space while other might have past operating or investing experience that makes them more likely to "get" your idea. Don't forget, silence might mean "heck, I don't understand enough about this to sensibly comment!"
Here are some pointers to consider when pitching a VC and wanting to get feedback to help improve the business idea (or convince yourself to try something else!):
- Seek out VCs with relevant experience and look for someone who knows that VC for a referral.
- Pay attention to the body language and questions during the presentation – better still, have someone with you who can take notes on these subtle cues during the meeting.
- At the end of the meeting ASK FOR FEEDBACK. This is like being in an interview – it's your last chance to answer a critical question and leave the final impression. After all the years I've interviewed people, I'm still surprised by how few people ask this question at the end.
- If the VC goes radio silent, go back to the person who referred you to the VC and ask them to see if they can get feedback.
If you ever pitch me, I guarantee that you will get feedback to answer both questions!