If you have pitched sent your proposal to VC's, you have probably received one of these:
Thanks Company X for sharing your proposal, this is not one for us, best of luck with the fundraising and stay in touch. Best, VC Y
You are probably thinking, WTF. After all, aren't VC's paid to look at pitches and business plans ? Actually, we are not. Here are reasons why I regularly write the above:
- If I won't invest in you, I can't spend time with you. And before you ask, of course there are plenty of exceptions including some really naive entrepreneurs who I really like and spend time mentoring for no good reason, but I shouldn't be doing it, really.
- If I try to provide you with a smart and structured answer, it's going to take me 30 minutes I do not have.
- If I try to provide summarized feedback, you will either take offense or think I am really dumb. Here is one example of heroic summarisation:
- Value chain dynamics too complex
- Can't see how this scales given revenue model and the above
- Does not feel like a large enough opportunity for the type of fund we have (or similarly evasive comment)
I used to call people systematically because I thought this was more polite -- let's just say it was a bad idea.
The Truth is, much of the time, I DON'T KNOW why I pass. I just do pattern recognition and I pass, fast. Example: average looking team - tough market - financials don't look ambitious - product replicable --> pass. Time spent: 3 minutes and 12 seconds including writing the mail. I hear you thinking it's not fair, after all you poured your heart and soul in that business ... and I know that. Why do I do so ? Because filtering effectively is a survival skill in my business.
That is why you need ... intros.
UPDATE:
Judging from the commend thread, I'd better not publish another post this unclear in the future. My point was really the following: if you send your proposal over email, this is how it's most likely to be processed. Not the careful consideration you were hoping for, and not worth your time.
In fact, if I look back at our investment history, I don't believe we have ever invested in a company that emailed its business plan over the transept, and I suspect that is true for all VC firms.
When we decide where to spend time, we have to prioritise. Anything that comes from a trusted source will get a careful look. If Joe Cohen at Seatwave or Alex Chesterman at Zoopla sends me an email saying "you ought to look at this, the guy is really good", you can bet I will. And I must say I completely agree with Deek: young turks, of for that matter any VC, need humility and hard graft. It's tough to find good projects, and it takes a lot of hustle (and humility).
We also have "type 2" mistakes often. The investment you say no to that turns out to be great. Just look at the famous Bessemer anti portfolio: http://www.bvp.com/Portfolio/AntiPortfolio.aspx.
When you send an email into the dark to someone you don't know, you are likely exposing your project for nothing. So rather than waste your time and diminish your appeal to investors, you are much better off approaching fewer investors through trusted contacts. And believe me, we will be here to listen.
Fred Destin is a partner at Atlas Venture. This article was originally posted at his blog, and is reprinted with permission.
