ASK YC: Dilemma - A few VCs interested, but we dont need funding. What do we do? | Hacker News Reader

ASK YC: Dilemma - A few VCs interested, but we dont need funding. What do we do?

8 pointsshafqat13 comments

We're a super early stage startup. I've been talking to a VC connection of mine for a while, exchanging ideas, helping plan next steps etc. Recently, a few notable VCs have gotten in touch wanting to meet up. How do I approach this? We don't need any funding, but don't want to lose their interest. Do I tell them flat out we don't require funding? I would love to keep in touch and get advice and work their connections though...

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It is my understanding that VCs will never hunt you down and beg you to take their money. Even if everything goes perfect as far as they're concerned, it will be a while before you would get a check. The VCs want to meet with you for two reasons:

1. They are interested or invested in what you are doing. They may be planning on investing in that market, or they may have even already invested in a startup and want to scout out their competition. They may also be invested in a complimentary area and are thinking about how what you're doing could add value to what they already have.

2. They are curious and think that what you're doing has potential (read: They think you can make them money). They may or may not try to invest, but the possibility of investing is used as "bait" to get you to meet with them... except in this case you don't want the bait.

In either case, I suggest meeting with them. Let them take you along for the ride, but always be cautious. There is a possibility that you could benefit from their contacts, and starting the money talks now will help if/when you need it in the future. Just be aware of the fact that they might be meeting with you to gather information that can be used against you.

Good luck! You've obviously started something that has at least got their attention - for better or worse!

As any VC will tell you, don't raise money if you don't need it.

Absolutely agree. Thats the dilemma - I want to be completely upfront. We dont need and dont want money. What we would love is guidance, advice, networking etc. But I imagine VCs aren't really in that game (btw, just read your essay!)

Most VCs you can safely tell you're not currently looking for money, and they'll still help you. If you're good, they'll want to start a relationship in case you need money later.

Wasn't it Eugene Kleiner who said, "Take the money when it's available." :P

Marc Andreessen says, to "[raise] as much as you can. Without giving away control of your company, and without being insane." (http://blog.pmarca.com/2007/07/the-pmarca-guid.html)

I don't have the experience to say whether or not I agree, but it's another viewpoint worth considering.

It kind of depends on what your strategy is. Netscape had to staff up quick so they raised as much as they could. In their case, they needed as much as they could get, I suppose.

I wish we had this problem.

We're a new startup (called Elleo Ltd.) and we have developed a very interesting piece of technology, semantic engine, a prototype that actually works! Please let me also mention that this is no semi-functional semantic engine (as we've all seen around) but a real thing on which our team (we are 3 world champions in programming!) worked for over a year. We believe with our hearts that there's a need for our technology and that we can truly create a new mean, a meaning that will make the world a better place.

Sadly, as you probably already all figured, we're all technical guys and we have no idea how to "business-talk" and lift our startup off the ground, so that we can carry on working on this full-time.

We've been reading a lot (and I mean a lot) on startups, VCs, etc.., we've even attended The Next Web conference in Amsterdam but what we still didn't quite figure is how to approach VCs and get them hear what we have to say.

I would very appreciate if you can give me an advice on this.

Also, if you'd be interested learning more about our exciting project, please contact me on jparicka(at)gmail.com. Otherwise, wait for a demo which should come out shortly.

Thank you!

Jan

Jan - will shoot you an email. I can tell you what we did and maybe it'll help. Also, sent an invite for our startup so you can check it out!

Say "maybe", or "not right now", or "my partners aren't sure" and they should feel at home. :-)

http://blog.pmarca.com/2007/06/the_pmarca_guid_2.html

Yes meet with VCs, but don't sign anything and take any money until you have a good idea about whats up for grabs.

When you accept VC money its the equivalent of going public, you will have to make sure your start up turns around a profit or sells rather quickly...

When you don't want/need money is the best possible time to be talking to VCs. You might decide that with the right terms, you could use some capital after all. Or, you might realize that they're not as interested as you thought.

Great advice guys, thanks a lot! I'll be honest with them, and hope they'll keep in touch and help us out on the ride up (hopefully not down!).

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