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Charlie O' Donnell
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Talk to ten founders and ten different VCs and you’ll get roughly about 600 different suggestions as to how you should go about your fundraising strategy. I don’t know what the formula is here, but the numbers and the resulting amount of confusion gets big very very quickly.
Why does it seem like there’s an exception to every rule? You’re told that you can’t raise until you have a product, yet pre-product companies get funded all the time. You’re told that you need more revenue, but someone who has half the revenue that you do got funded last week. What gives?
The problem is that your pitch is a combination of a bunch of individual components, each of whom an investor is going to have particular reactions to and sometimes a great reaction to one is enough to push you over the top—or sink your pitch.
For example, I’m more than happy to fund something that is pre-product except if you’re in a notoriously difficult to sell into industry, like small businesses, government, or education. In those industries, there are lots of seemingly great products that die because the team lacks the expertise to break into the market.
Even a particular attribute like revenue has several factors to it, like growth, concentration and whether or not that revenue is a subscription for SaaS, one time purchases, or consulting. A million-dollar run rate achieved in four months will garner very different reactions in the market than one reached after four years. Investors also care about how much you spent to get there and also whether you’ve built a team to do it, which is really to say whether anyone else besides the founder seems to be able to sell this product.
Too often, founders look at what they’ve done so far as proof they should get funded, whereas they should really be looking at it as proof of a funding-worthy plan. Fundraising is an exercise in selling tickets to the future, not a reward for the past—so even if you’ve got all the same attributes as some other company, your ability to describe the future may have been the difference between being funded and not.
The market also affects your raise. This year, while a lot of companies have raised big rounds, there haven’t been as many super early, crazy ideas backed during the quarantine. From what I’ve seen in the market, despite the fact that the two term sheets I’ve offered this summer were to first time founders, a repeat founder in a well-understood space is more likely to get backing when everyone is feeling uncertain and risk-averse.
One of the things we learned when we built the anonymous fundraising feedback tool Feedback.vc is how much sector affects a VC’s willingness to look at a deal. When founders anonymously described their companies to a blind pool of investors, the biggest factor wasn’t traction—it was what problem you were solving. Solving the right problems made investors willing to overlook a lot of other things about the company.
Understanding which aspects of a company an investor is going to focus on in the fundraising process is incredibly difficult, and is worth asking about right off the bat. Too many founders just jump right into a pitch without even stopping to understand where a VCs questions are.
Often times, when I take a meeting with a founder, I tell them right off the bat that I’m happy to have them run through their pitch, but my initial concerns/questions are X, Y, and Z. Not enough founders gather data from their pitch meetings in this way to understand what VCs were focused on before they even heard the details.
In many ways, it’s a lot like buying a house. Two houses of different locations, sizes, and attributes are very difficult to compare. When you read fundraising advice to founders, think about how much blanket statements would make sense for real estate. Imagine telling everyone from bike commuters to people who work from home to “Move next to public transportation”.
It wouldn’t make any sense—and figuring out what kind of advice makes sense for your startup requires a lot of listening to what VCs are saying about your company, not necessarily all startups in general.
Reports of NYC’s death have been greatly exaggerated.
Far from becoming a crime-ridden hellscape, NYC’s actual numbers of murders and robberies are on a pace that is not only down from 10 years ago, which was eight years into Mike Bloomberg’s term as Mayor, but they’re almost half as much as they were at the end of the Giuliani administration, when people thought NYC crime had been "cleaned up".
Our current coronavirus case counts make us one of the safest cities to be in the entire country. While our elected leaders have taken a big victory lap on how far we’ve come, the real heroes are NYC’s own residents, who have been, for the most part, excellent at being responsible. Any narrative that puts our leadership at the center of our recovery largely erases their ineptitude in the early days of the pandemic.
I’m not writing this to look back, but to look forward—to acknowledge that while New York City isn’t the disaster area the NY Post would have you believe it to be, it has some really serious problems that it needs to dig out of—much of it economic, but under the covers, systemic.
This problem set is an opportunity for Mayor Bill de Blasio, normally New York City’s easiest man to find in a crowd, to show up as a leader.
Unfortunately, he has become the Big Apple’s biggest missing person—literally. People who work in government that deal with the Mayor’s office have said off the record that they seem “disinterested” in new initiatives.
The Mayor has about sixteen months left in his tenure. While it’s not enough time to fix all of NYC’s problems at it recovers from the pandemic and resulting recession, we need to make sure that the work gets a head start.
Months ago, de Blasio outsourced this opportunity to something called the “Fair Recovery Task Force”. They were supposed to produce a plan by June 1st and we’re still waiting.
Given the smart folks who are on it, I’m sure they’ll come up with some good ideas, absolutely none of which will be implemented as the Mayor rides out his lame duck last year and the NYC Council gives way to 2021 election season.
That’s what happens when you ask someone else to create a plan. The act of asking makes it seem like you’re doing something—but ultimately you’re not taking responsibility for it yourself.
I want to know what Bill de Blasio’s plan is. He’s still the Mayor. I want to know what he’s willing to put his name on himself and take responsibility for setting in motion.
New York City, like most major cities, had a lot of problems before the pandemic hit. Like most of the country, it has become a tale of two communities.
If you were employed within NYC’s growing tech ecosystem, or its continuing to thrive financial sector, you were doing pretty darn well. Outside of that, if you were trying to run a restaurant that wasn’t Shake Shack or trying to raise a family on a budget as teacher, things were hard and getting harder.
Housing costs, while not quite at San Francisco levels, are out of control.
My dad was a NYC firefighter from 1963-1983. In 1969, after six years on the job and making the salary equivalent of about $60,000, with my mom taking care of my brothers, he bought a house in Bensonhurst, Brooklyn. The cost of that house, also in today’s dollars, was about $150,000. Can you even imagine that today? He bought a house two blocks from a subway station in a good neighborhood for just over two times his lone NYC civil servant salary.
That would be impossible today. Homes on that block are now going for over $700,000.
We continue to have a serious homelessness problem—one that was worsening even before the pandemic. Despite years of economic growth in the city, the homeless population was larger at the start of this year than when the Mayor took office. I say despite, but those familiar with the problem would probably say “because of”.
As market demand drives the cost of real estate up, housing for low income NYers takes a back seat.
Small businesses are hurting, too. Commercial rents are suffocating the city’s best gathering places and they’re being replaced with bank branches and Dunkin Donuts locations—or nothing at all. Landlords seem content to sit on empty storefronts for entire cycles.
What the city needs now is a kind of Constitutional Convention scale effort—perhaps not in person, and definitely not just a room full of wealthy landowning white guys—but the kind of effort where any idea is on the table. We need bold, competing visions that get openly debated, and real effort to hammer out compromises.
I’ve always liked the idea that a bunch of people got locked in a room to hash out a plan for a new nation and basically told not to come out until they had something—an actual plan.
Bill de Blasio could take personal responsibility for facilitating that process. He could highlight the four or five biggest issues that were exacerbated by the pandemic, and convene an inclusive process for ideas on how to address them directly. He should encourage bold new legislative actions and shed light on where the city’s hands are unnecessarily tied, so we know what to advocate for in Albany.
He should make it his mission to move the conversation of everyday New Yorker’s from defending the city to outsiders on Twitter, to collaborating with their neighbors on ways to move the city forward, together.
In June, de Blasio created a situation where the city tried to address racial equity with competing press releases and speeches. What was ever going to get solved with Pat Lynch grandstanding on one side and de Blasio fumbling around in the press on the other?
Neither showed any kind of real dedication to problem solving and their approach just divided up the city into those who were for cops or against cops. In the end, both the cops and the protesters came away from the process completely dissatisfied with the Mayor’s leadership—which is a really amazing feat if you think about it.
de Blasio was a price taker in those negotiations, not a price maker. There was no “de Blasio Plan” for fixing the systemic racial issues in our system of criminal justice and policing. There was just the plan that could get done given an administration unwilling to put in the effort and make hard choices.
Along the same lines, I don’t want to wait for six people in a room to tell me what the recovery plan is only to go back to business as usual. I don’t want to wait another election season to hear other people’s good ideas either.
I want the one person we elected—on a now failed platform to make NYC a more equitable place—to bring all 8.4 million of us together to get on board for a plan we can call our own.
How about we start adding the first zip codes in the whole country where a minimum wage job can afford a safe place to live?
Let’s get a lot more serious about investing in social welfare and equitable outcomes across racial and economic lines so that we don’t need to flood the street with more police officers to deal with the aftermath of underresourcing our most at-risk communities.
Make NYC a welcoming and affordable place to start a business—not just a venture backed tech company, but a new restaurant or grocery store.
Create a local healthcare system a place that addresses a serious lack of equitable outcomes for all New Yorkers.
Let’s reinvigorate NYC’s street life, making the city a safe place for more neighbors on stoops watching kids play in the street, improving the quality of our park spaces, fostering fun nighttime gathering spots, and less big box retailers, bank branches and other soulless additions to our neighborhoods.
We could be a model for other cities going forward, if only the big man would put all that taxpayer supported gym time to work, put his oar in the water, and paddling as hard as the everyday New Yorker will have to.
One of the core beliefs that I had when I started Brooklyn Bridge Ventures was that most of the next 50-100 important companies to be built in New York City were going to be started by people not on most VC’s radars today.
To that end, my goal was to make the firm the most accessible VC fund in New York—showing up across diverse communities, getting rid of barriers to access like requirements for warm intros, and being conscious of which patterns of success I believe in and which only serve to reinforce certain power dynamics.
The venture capital community reacted to the racial reckoning the country experienced in June in ways I felt were pretty underwhelming—one-time pitch events for Black founders or promises to only meet with Black founders for a month.
I wanted to build something that would be above and beyond the fund that would create ongoing change, creating more Black founders as well as those from other underrepresented communities and leveling up the networks of those who had already taken the plunge.
Circulate is a new initiative supported by BBV that will start with a series of virtual conversations within an intentionally diverse group of invited guests--conversations that we hope will turn into communities. These industry-specific events will bring together a who’s who of accomplished and influential professionals as well as the most promising "future founders" from Black and other underrepresented communities that represent the next generation of these spaces.
The other day, I was telling an experienced founder in a particular vertical—someone who sold a company and IPO’d another, about what we were doing. I pointed out that since most of our networks tend to look like ourselves, that as a straight, white male I had a statistically higher chance of knowing him, another straight, white male, personally, and being able to go to him if I wanted to build something in the space he knew well for knowledge or for funding.
The Circulate series acknowledges that access to ideas, resources and networks is structurally unequal. Sparks of innovation need to be fueled by firsthand experience, connections to capital, and influence sharing. These resources are often walled off within existing professional networks that lack diversity.
That’s what we want to change with these events.
Each Circulate event will be run in coordination with industry professionals that understand structural inequality in a personal way. In September, we'll run a virtual event on Education led by former Google Classroom PM and current new founder Ope Bukola. Our second will be on Global Supply Chains and run by Brian Laung Aoaeh, Co-founder of The Worldwide Supply Chain Federation and Co-founder and General Partner of REFASHIOND Ventures. We’ll follow with events on Fintech, Climate, AI, and other sectors of innovator interest. Brooklyn Bridge Ventures will support these professionals with our event and community-building experience. Ultimately, we hope these groups will be self-sustaining and led from within, with Brooklyn Bridge Ventures acting as catalyst and supporter.
If you are a Black professional (or hacker, or a tinkerer) with a passion or even just a curiosity for change and disruption in a particular industry and would like to strengthen your network by tapping into the experience of influencers and insiders, drop us your info. We want to make sure top industry professionals are connected to "future founders" from the Black community--the builders, creators, life-long learners, and those who show entrepreneurial tendencies in their own career at any scale.
Our hope is to connect leaders with more Black future founders and industry changemakers than they know today--as well as people from other underrepresented communities--and to bring their experience and insight into this network as well.
If you’re a leader in your industry—statistically, as it is, most likely to be white, and probably male—and you would like to share your experience, your network, and your influence with underrepresented future founders and leaders, please fill out the form on our site. We would love to connect with you and have you at these events.
We appreciate you sharing this announcement in your networks!
While we don’t have kids yet, we’re of the age where a lot of our friends do—and the back to school situation is on everyone’s mind. Is your school open? Are you sending them? How did your kids do with distance learning?
What struck me is the stories of how different personalities of kids have done in quarantine—and adults are no different.
Some are absolutely thriving—super focused, avoiding distraction.
Others are kind of lost. They work off competition and/or inspiration from others and not being in person with a group is sapping their creative energy.
Loneliness is a serious problem for many people right now.
Where am I on this?
I feel like I’m kind of in the middle.
I’m a pretty steady person in general—I don’t get too high or too low emotionally. So, I can’t say I’ve fallen off the deep end of despair or anything, but I can’t say I’m thriving either. One of the things I like best about being in New York City is the diversity of people I encounter on a day to day bases—at least in the Before Times, anyway.
Now, I’m stuck getting my exposure to people online.
Clubhouse is basically the opposite of what I’m looking for. It’s tech people talking about tech things at best, and VCs talking about Clubhouse at its worst.
I miss the randomness of in-person people for sure.
What about you?
How are you sparking your creativity (or not) in quarantine and what have been your best sources of human inspiration?
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1) Legalize all the vices. Quarantine brought us some relief on alcohol takeout in order to give local restaurants something else to sell—but that doesn’t nearly go far enough. Not every attempt to fill the city’s budget needs to come from increasing the taxes on things we already tax. The easiest new source of revenue for the city would be areas where there’s already lots of illegal economic activity that doesn’t get taxed at all, but where legalization would actually bring regulation and improvements—namely, vices.
Marijuana is an easy one. It’s already being mass-consumed tax-free. It’s been decriminalized in several ways. Now it’s time to run this thing into the end zone—and while we’re at it, throw away all of the previous convictions and records that go with it. That would save us money on incarceration on top of a windfall tax on sales.
Sports gambling is another easy one. New Jersey already allows it. Let’s stop PATH train riders hopping over to Jersey City to place their bets and let them keep their money and their taxes on our side of the river.
Sex work is one that fewer people might support—but over and above the tax potential, there’s a moral argument to be made here as well. Regardless of your opinion of it, sex work is a source of income for many people in NYC, especially immigrant populations. By keeping it illegal, it prevents those in the industry from coming forward when they are victims of abuse. Regulating it and giving these people proper worker protections would improve their working conditions and make it easier for those who desire to leave the industry to escape cycles of abuse.
Outside of that, if two consenting adults free of any coercion want to engage in a financial transaction, and taking a cut means less of a tax increase for you personally—how hard do you really want to argue against it?
I mean, if two boxers can make a living beating each other to a bloody pulp in front of an audience and we don’t mind collecting those tax revenues, we’re being a bit hypocritical to be so high horse about this being a sanctioned part of the economic system.
2) Cut the police budget. The NYC Council is calling for a $1 billion budget cut—asking the force not to respond to every last cat up a tree with two armed officers making, on average, $90,000 each. We all have to make due with less—and this is basically the increase in budget during the Mayor’s administration. Let’s not replace the retiring cops leaving via attrition and instead take that money to invest in social services and housing stability that have been shown to prevent crime.
3) End the stock transfer tax rebate. You may not realize this, but Wall St. firms are on the hook a sales tax when they sell you a stock—only it gets 100% refunded to them. Due to some archaic bond offering rules, the tax actually gets collected, but then it gets sent right back to brokers. The state began rebating the tax in 1979 (at 30%), 1980 (at 60%) and in 1981 (at 100%). It is estimated that eliminating this tax would erase the entire budget deficit, and also cut down on high frequency trading, which can impact volatility in the market.
4) We need to push the Federal Government to close the carried-interest tax loophole—but we should do it in such a way where the localities where it gets collected get a share of the income from it. There’s no reason for private equity managers, hedge fund investors or VCs to pay less taxes as a percentage than teachers. Fred Wilson agrees. Closing the carried interest tax loophole is something Trump said he was going to do when he campaigned. It will mostly piss off people in states he doesn’t win anyway—NY, CA, and MA. Plus, he could say that he went after the rich in other ways as a defense of his tax plan and general bent towards grifting for his friends.
If New York politicians push for it, perhaps we could see some of the benefit disproportionally accrue back to us.
5) Tax the empty luxury residences that are just used as stores of money and high-end pied-a-tierres. If you’re not paying NYC taxes b/c you’re a resident less than half the year, but you own property here that you’re not renting, then you should have to pay at least something extra rather than able to fully avoid taxes by being domiciled in another state. There should be an extra penalty for taking up a lot of extra space and not being here those days to economically and socially contribute.
6) Charge for parking—everywhere. Cars get a ton of NYC real estate for free—why? Give hospital workers free parking passes and people below a certain income who can show they need a car for work, but if you’ve got a weekend car for Vermont skiing, then you can chip in for a permit. It could still be less than a garage and it would help monetize all that space.
7) Promote the filling of empty storefronts. When local stores close, and people shop online, money drains out of the city into the hands of non-local companies. We should find more ways to allow small local businesses get started and thrive. For example, anyone should be able to get a lease on a storefront that has been vacant for more than a year for a set percentage of sales without a costly down payment—with a right of first refusal if the landlord can find a higher paying tenant after that. If you’re holding on to empty space and someone makes a qualified offer to start a local business in the space, cutting you in for a reasonable percent of the revenue, you shouldn’t be allowed to turn them down.
It would be incremental earnings for the landlord, more sales tax and payroll tax for a new business—and less people out of work.
8) Bank the underbanked. There shouldn’t be any Checks Cashed places in NYC. They’re one of many ways that it’s expensive to be poor. You should be able to cash a check at any ATM in the city and deposit it in a no fee, no minimum account. If banks don’t want to offer it, the city could get into that business. The city doesn’t have to deal with customer acquisition costs in the same way—all of its press conferences come free. Why not have a City Government run bank or financial institution that could bring financial services to everyone?
The city might be in a position to do this profitably—no marketing costs and no additional real estate overhead given how many local city offices there are. It’s a dream advantage for a startup.
9) Open the streets and vacant lots to business. We’re letting restaurants create outdoor cafes. Let’s go a step further and start closing off streets, replacing them with more open air businesses that generate sales tax—especially in the summertime.
10) Tax the noise. Unnecessary honking, and cars and motorcycles tuned to purposely create loud exhaust are a blight on the city. Cops never ticket for them, so why not let acoustic cameras do the work the same way speed cameras do? Getting a speeding ticket with a camera is super annoying—the first time. After that, when you know where the camera is, you slow down. It works and the tech is out there to do the same with unnecessary noise.
One thing I’ve seen from both VCs and LPs over the past week is a hesitation to engage around race discussions. There are some who don’t believe they’ve done anything “wrong” and therefore see the whole thing as a distraction. Others are so uncomfortable with the idea of getting flamed or canceled despite good intentions that they’d rather do the absolute minimum.
If you’re a white professional in venture, you might feel uncomfortable tweeting or blogging about race. The way I think of it, I’ll never feel nearly as uncomfortable in my life as much as what I imagine a person of color might feel at a traffic stop.
Until that changes, I need to be taking these really tiny risks at a bare minimum.
Besides, if you’re not comfortable with making mistakes and learning from them—what are you even doing in venture?
While I got some very kind words on my recent writings, I heard from some founders that didn't feel like they got treated fairly—specifically around feeling patronized or dismissed—and that I wasn't showing enough action to improve on that.
My first reaction was to debate (if you know my personality, that's hardly surprising), but then I gave it some more thought and realized that I had a blindspot:
My dedication to honest and direct feedback to as many founders as possible has different consequences for different founders.
I try to get back to everyone—which is something not all VCs do. Sometimes, that just means I send off something quick, because of the inbound volume, like this:
“I’ll pass, because I just don’t think there’s enough money to be made here given how hard it will be to make each sale and what little you make per customer."
I figured better to get a quick something than nothing at all—or, just an “Interesting!” which is useless.
If you're in a more privileged position with lots of VC connections to pitch, you’ll either do one of the following things:
You'll come right back at me, tell me why and how I'm wrong—because at this point you have nothing to lose.
You’ll just think I’m dumb and will move on to try and find a smarter VC, showing just as much confidence in the next pitch.
One thing that I hadn’t considered before is that if you've had an extraordinarily difficult time getting people to hear your pitch because you’re not in certain networks and your lived experience has been being discounted and not taken seriously, my words are going to be taken differently.
It’s easy in my position to forget how much courage it takes to pitch something for any founder—but especially founders for whom stepping out and taking this kind of risk feels like it comes with a bigger downside. Founders from communities of color are less likely to have personal wealth to fall back on. They’re less likely to have those same insider connections to help get them that next job if it doesn’t work out. It doesn’t just feel like a bigger risk—it is a bigger risk and they have more on the line.
If you’re constantly reading that this system isn’t built to help you—and you aren’t finding any experiences to the contrary, your likelihood of just throwing your hands up and bailing from startups is higher. When I decide not to meet with someone or to pass on an opportunity, which I’ll unfortunately have to do for most pitches, I need to do a better job of keeping that in mind. I can try hard to be objective about the business opportunity without saying something that doesn’t make them more likely to drop out of the process of finding their next big thing entirely.
Sometimes, it’s not even a matter of being short with someone. It could be asking the same questions I would ask any other founder without thinking much about how it would be interpreted.
If someone doesn’t send over a financial model and I say something like "I don't see how this gets to $100mm in revenue", it's not a short jump for someone to hear that as "Your idea is small, and not important."
Straight white guys never hear it that way.
Similarly, when I say, "Can you show me a model of how you think this round helps you hit your goals?" that is often going to sound like a lack of interest and an unwillingness to just say no.
Fundraising can feel like a series of endless hoop-jumping--that investors who don't intend to back you will keep asking you questions until you give up instead of just saying no. What I have heard multiple times from founders of color and female founders is that it is exhausting and discouraging.
One thing I need to do better is to share context to my feedback for those founders I think might be feeling exhausted by this process, particularly underrepresented founders, and present more helpful solutions. Instead of saying "I don't see how this gets big" perhaps it would be better to say:
“A lot of founders pitch with a conservative estimate of what they believe they can 100% commit to, which I appreciate *after I've invested*--but investors aren't investing in the certain, we're hoping for the *possible*. I’m not sure if that’s how you’re positioning this or not.
Do you see any pathway to getting this business to a $100mm a year annual business? Can you show me a version of this plan with how it might be possible?
If that's not in the cards for your business, that still could make it a great business, but then the kind of capital I'm offering probably isn't a match for what you're looking for from a risk/return standpoint."
That's not perfect, but I'm certainly going to commit to working on better ways to share feedback—to make it feel like when I am interested, I’m actually going through a real process of serious due diligence, and when I’m not, to at least acknowledge the try a little better.
Don’t get me wrong—I’m still going to be super direct and honest, but it doesn’t have to feel brutal.
VCs are notorious for kicking tires.
VCs take a meeting just to learn about an area. If deal flow is slow, a VC will take a meeting if you and your team seem mildly interesting even if your product isn’t. Sometimes, if you seem well connected to other founders or VCs, that will get you a meeting—because you don’t want to miss something everyone else has seen.
Some later stage funds will take a meeting long before they ever plan on writing a check with the promise of “opportunistic” seed investments (to the guy or girl they went to grad school with). Some VCs have no money left in their funds, but they still like playing VC.
You could complain about this as bad VC behavior, because wasting a founder’s time is a mortal sin in Startupland, but I wonder why we’re letting founders completely off the hook in this process.
If you had a salesperson and they spent all of their time with inbound leads that didn’t pay off, you’d have to let them go. The ability to qualify a lead and spend time in your pipeline commensurate with the likelihood of payoff is a critical skill.
Or, you could blame the leads.
Fundraising is a sales process for shares in the company.
Is it the lead’s problem that they aren’t serious buyers? A great salesperson would figure that out right away—and qualifying your fundraising pipeline is a critical skill for a good fundraiser.
So how do you qualify a VC in your fundraising pipeline?
Ask Pointed, Specific Questions
Do you lead?
Do you have dry powder for this? How much?
Do you have the bandwidth to work on this?
Do you see a reason to turn this down right now?
What do you feel you need to be convinced?
What do you feel you need to convince others in your firm?
I believe X, Y and Z key things that cause me to believe in a big outcome. Do you agree with all three? Do you think the outcome could be as specifically big as I do?
What work will you do next to either convince yourself to do this or not to do this?
When can I expect this will happen?
If you walk out of a meeting and you don’t know anything more than “They thought it was interesting…” then you didn’t ask enough about where they were at on this.
Manage Your Time
Control the time and structure of the meeting.
Have a plan for what you want them to know—have questions to make sure they understood it and come to next steps that either move them forward in a process or off the potentials list. Use some old school sales tactics like, “I’m going to use this first ten minutes to determine whether this is a fit—would you be willing to give me back my time if you determine right away that it isn’t? I have plenty of calls and e-mails to make and would appreciate a quick wrap up if you’re not interested to hear more after that time.”
Seniority Within the Firm
Some non-partners at a firm can lead a deal—but the reality is that if you’re scoring your VC leads on likelihood fo close, you have to take points off for junior VCs or partners who probably have less pull. The partner who just got promoted from principal undoubtedly will have a lower close rate than the partner whose name is in the door or who founded the firm.
That’s not to say you shouldn’t pitch people besides the most powerful partner that everyone else is probably pitching—you just have to be careful you’re not leaving yourself open to being disappointed at the finish line because they didn’t have the internal pull to get it through the partner meeting.
Circumstances of the Meeting
Did they feel obligated to take the meeting because of an intro or do they have a stated interest in the space—or even better, did they tell you specifically why they’re interested in your company?
Scheduling and Cadence
An interested VC won’t wait a week or two when a round is in process to meet. They’ll get back to you right away without you prompting it. They’ll even introduce you to others in the firm before you walk out the door. If you feel like you’re pushing the deal forward, your chance of closing are defiantly lower.
Researching the Space
Ideally, the investor either already knows what they’re looking for or you’ve so clearly articulated the opportunity that they don’t need to take time to get up to speed on the space—or, you’re so clearly the expert team that they trust you know what you’re doing. Anyone who has to start from scratch on a space isn’t your most likely next close.
Lack of Vigorous Agreement or Disagreement
If a VC has strong opinions, you can have a back and forth. If they’re just not engaging at all, there’s a good chance you’re looking at a pocket veto.
A pipeline should feel active—a living, breathing organism with flow and movement, not a sack you’re dragging up a hill. Remember, there is way more money out there than good ideas—so if they’re not chasing you, you probably haven’t done the job of being convincing.
If you can’t get a read on VCs at all, you may want to check out Feedback.vc, where you can get aggregated and consistent feedback from an anonymous panel of venture investors.
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