Q: What's your favorite type of VC?
A: Ones that say "yes."
An insightful answer:
Q: What's your second favorite type of VC?
A: Ones that say "no."
I am enjoying operating a business without outside investors (nor plans to acquire any). However, many of my customers are startups and actively (or about to be) raising capital from venture capital investors (VCs). As a consequence, I've been sharing this concept a lot lately.
A lot of VCs never say yes or no. They say maybe. They ghost.
I am told by people who have been or are VCs that the reason VCs do this is either:
- They are too busy to be polite
- They are worried they'll say "no" to you. Then you'll be very successful. They'll want to be friends or invest in you later. You'll remember the "no" and then tell them "no."
In my opinion, after having helped raise more than $30MM across three different companies from several very different VCs. While, yes, my favorite ones say "yes" and write a check, I much prefer a "no" to being ghosted, ignored, or led on.
When telling fundraising stories, I think I tell a good "no" story more often than my "yes" stories.
In 2012, when I was raising my first round of capital for Wallaby Financial, I met with a VC who stopped me halfway through my pitch. We had spent maybe 20 minutes together, and I'm sure I felt only halfway done.
She said, "I'm going to stop you right there. I'm never going to invest in this business. It's just not for me. So I'll save you and me time and wrap this up. I will also make one introduction to another founder who I think could help you."
I loved this.
She saved me time in the meeting from several follow-up email messages (I did send a thank you) and gave me a great introduction.
Plus, I had time to go grab a coffee before my next VC meeting, which resulted in an "interesting, send me a follow-up."
On a related note, the folks who said "yes" to me always said "yes" quickly, usually in the first meeting.
Either you're bought in, or you're not. Selling an investment to someone who isn't really interested doesn't work. We tell entrepreneurs that grit and perseverance are essential (and they are), but it's more about at-bats than swinging at the same lousy pitch over and over.
I was never offended by a "no." I always appreciate the clarity and the VCs who can make a decision and stick to it!
VCs, I hope you're taking notes.