Investors won't give you the real reason they are passing on your startup
techcrunch.com
techcrunch.com
That's true of most things in life.
In other words, I wouldn’t believe the other 20%…
But those guys were product people and to the extent that their low-empathy personalities were beneficial it’s in the fact that they cared about creating things far more than anything else, including other people or money. The phrase “artistic temperament” long predates them for a reason.
But it’s really absurd and counterproductive to try to mimic that personality if what you’re offering is anything other than being the corporate version of an auteur, and if that’s what you were you wouldn’t be mimicking anyone, and you better produce some stunningly consistent results. Lots of these guys think they’re being uncompromising about “their vision” when it’s really just “their vision” of their spot on the Forbes list.
New York is better in part, I would guess, because there’s no false premise that the investor is doing anything other than acting as a conduit for capital. There’s egos too but no one is trying to live up to the standard of “changing the world” or “innovating” or being “the next ___.”
It probably also helps that Warren Buffet is the most successful traditional investor of all time and a model of good behavior.
A rejection does say nothing about you. The guy the hired says a lot about the company.
So many good ideas and companies go bust once they accept that vulture capital. End up trying to do too much in order to capture a wider market. Unfortunately it ends in a crash and burn once the VC expectations are not met and money dries up.
Is your argument that investors should willingly do things with a negative expected value?
ZIRP boosted investment the last ten years has been insane (and stupid).
Yes, investors can allocate their resources with the expectation of gain outside the financial realm (but whether or not they have any other sensibilities is a much harder question).
A preoccupation with money (or really any superficial thing) makes dull people, with dull ideas, and ultimately dull impacts.
I would demand the investor have atleast some inkling of humanitarian sentiment that comes from within, and not simply the environment they found themselves born into. Otherwise, you'll end up with a petty tyrant no different than the owner of car dealership.
I don’t know why I would give them the time of day, same as I would anywhere that rejected me for a job but later had a change of heart.
Generally speaking, running a business is an exercise in pragmatism. Rejecting capital simply because they once slighted you is closer to a personal issue for a therapist than anything which belongs in the office. (Also, have you never heard of a happy couple who didn’t hit it off the first time they met?)
The poor sod that wants to reapply for a full time role after getting rejected once? The nerve! Who do they think they are!? We are the last word, don't they know? They need to have therapy.
There's a thousand others out there. I'm not going to throw away more of my life to make sure someone with a few more zeroes in their accounts feels seen.
Thanks for your diagnosis, I am cured now. Huge weight off my shoulders.
What? No! They should reapply. And the previous denial shouldn’t prejudice their candidacy.
My point is it’s game theoretically inefficient to hold grudges. That’s a personal issue. Rejecting bad actors is good. But a common personality failing—and I am prone to this!—is being stubborn in the face of a pragmatic win-win because of a perceived previous slight. This is true when talking about fundraising or something disagreeable a friend’s partner absentmindedly and unmaliciously once said to you.
It’s the expression: “if you don’t have anything nice to say, don’t say anything at all.”
The Silicon Valley tv series has this great when Eric Baurich goes from begging to being mean and that’s is a great example of this.
Same for anything, employment, dating, friends, etc.
IMHO most early stage investment is made based on hunches and hand-waving after doing generalist macro assessments of particular industries or trends. Frequently, faddish. GP's will often do this, raise a fund around it, then associates are sent out to get deal-flow and execute. Many startups will be get selected from an available pool with the established investment theme. This capital is largely sacrificial, and high miss rates are expected.
Where things get serious at the personal level is in the mid to later stages where you start to see bigger figures being moved about and investors want a shepherd for their capital who has proven stable and long haul capable - things like the capacity not to suddenly live beyond their means, lose focus, drop it all and go to Vegas, crash and burn at HR management, or break down at the first signs of difficulty. That said, you also get mechanics being added like tranched deployment and fiscal/management oversight (eg. board seats) which are highly effective at mitigating risk even in a low-trust scenario. Most VCs are early stage and never play at this level.
To put it bluntly: early stage is mostly noise. Mid to later stage, if they want the deal, they'll make it happen. It's your job to be so damn good they can't help themselves.</opine>
One can’t guess the successes. But you can eliminate the duds who won’t make it to a Series A.