Since I started my company back in January, people have been asking me about what it’s like to raise capital. The questions are very different depending on whom is doing the asking. My higher tech friends have some really specific questions: “Did you meet with Sequoia?” “How is Sand Hill Road?” My more regular friends and family have more often said, “Is it like Shark Tank?”
I hadn’t even watched the show when this question first popped up. I had heard about it, sure: the investors sitting on a TV set making investment decisions for cameras. I decided I had to watch it. I’ve see at least six episodes so far, so now I think I can finally weigh in.
At this point I have done more investor meetings than I care to acknowledge. There’s been some good interest, too. With a few rare exceptions, it is actually a very pleasant process. Thanks to my good friends at Mucker Lab and some personal connections, I am pretty easily able to get meetings with very high quality investors. The investors respond pretty rapidly to introductory e-mails and we get a meeting setup on the calendar. I fly to the Bay Area (usually, there are some LA-based and NYC-based investors I have met) and have a meeting at the office. I typically get at least 45 minutes of the hour set aside, which isn’t bad.
And almost everyone is very nice.
Too nice, perhaps. One very smart person told me that VCs are buying options. They don’t want to piss you off in case you are the next Mark Zuckerburg, no matter how unlikely that is. Another smart person said they they’re just nice people being nice to other people. Well, whichever it is, it’s actually quite pleasant.
You go into the meeting. You get engaged with them on the idea. You have a discussion. They rip some pieces of it apart in a way that helps you make the business better. Then it’s over and the waiting begins.
This is the worst part. You write the thank you e-mail. You wait more. Sometimes you do get the next meeting. Sometimes you answer detailed questions with you model or send a revised set of slides over.
Most often, you get back the semi generic e-mail saying how they like you, but they don’t want to invest now for reasons A, B, C or D (or all the above if you were having a bad day). But they tell you you’re great. So that feels good–there is a fair amount of ego stroking going on.
Sometimes they leave the door open for a later phase. This is a way of saying, “We like you, but we’re not sure we buy the idea, so go prove it and make it way less risky.”
But this discussion of the post-meeting process is really not the point–it’s another post for another day.
Think back to Shark Tank. I’m sure the sessions are edited down, but you go in, you present, the Sharks are immediately in or out. And if they’re in, they are mean. 50% of the company for $100,000. Ouch. You get an answer on a deal, one way or the other by the time you leave the studio. No time for the entrepreneur to review his options, think up better answers to his questions or develop an alternate model.
The worst part about Shark Tank is that some of them, I would call out Kevin O'Leary especially, who seem to love really beating on the entrepreneurs. Always questioning how they can proceed without paying themselves, or arguing why they should manufacture in China. It’s just high-pressure and mean.
In contrast, Sand Hill Road is a gorgeous place, next to top research facilities with a lot of smart people who treat you well most of the time.
So, no, it’s not like Shark Tank at all.
For that, I am very glad.