4 ms·

(I'm the post's author and an investor.) 1) It's less about fickle and more about investors looking for easy reasons to say no. I see 1000+ decks and pitches a

(I'm the post's author and an investor.) 1) It's less about fickle and more about investors looking for easy reasons to say no. I see 1000+ decks and pitches annually but make ~10 investments. Quickly filtering 1000 pitches down to 200 that seem worth drilling on is part of what makes the investing process feasible. The first part of that funnel is all about eliminating things because they're not in my focus area, or they're in a geo I don't invest in, or their KPIs don't look great. 2) For seasonal businesses specifically, KPIs can be hard to read when there are drops. A SaaS company might grow a consistent 15%-20%/mo, but it's harder to figure out how to interpret 100% year-over-year numbers during the holiday season and then 30% year-over-year numbers in the following months. Is the 100% the improvement to focus on? The 30%? Something else? It's even worse if there's no year-over-year data: if Nov/Dec are great and then Jan is the same as Oct, does that mean the business isn't really growing? If you raise in Dec or Jan, it's easier to make the claim that not only are you having a holiday spike, but part of the spike is "intrinsic" growth, too. Also, I'm certainly not saying that investors would immediately pass after a few months of down KPIs. But lower KPIs do make fundraising harder even if you have a good explanation for them.

nathan_f77 10y ago
That's very interesting, thanks. That makes sense, you want to make your startup look as good as possible, and it's up to you to sell yourself to an investor. At the same time, I wouldn't want to do something that might appear deceptive. During my time with startups and meeting lots of people, I've noticed a certain "spin" culture, which some might be confusing with "hustle". It's not hustle if you're trying to deceive an investor to get them to give you money, with the knowledge that your KPIs are about to drop and they're going to be disappointed in 2 months. I'd rather just be honest and straightforward.
- lpolovets 10y ago
  I agree with you -- I am very much against deception, too. In this case, I think it's more like Schrödinger's box. If someone is pitching me in December, they can make a case that their current uptick in revenue is sustainable. Without the option to wait a few months, I have to decide if I believe those claims. The claims might be spin, but usually they're honest beliefs backed by a small amount of data. But once Jan and Feb KPIs come in, the data shows if the uptick will actually be sustainable. It's like opening Schrödinger's box and finding out whether the cat is alive. Now it doesn't matter what the founder believes or hopes because I'll be looking at the data -- and often the data isn't perfect, which hurts the ability to fundraise.

nathan_f77 10y ago

That's very interesting, thanks. That makes sense, you want to make your startup look as good as possible, and it's up to you to sell yourself to an investor. At the same time, I wouldn't want to do something that might appear deceptive. During my time with startups and meeting lots of people, I've noticed a certain "spin" culture, which some might be confusing with "hustle". It's not hustle if you're trying to deceive an investor to get them to give you money, with the knowledge that your KPIs are about to drop and they're going to be disappointed in 2 months. I'd rather just be honest and straightforward.

lpolovets 10y ago
I agree with you -- I am very much against deception, too. In this case, I think it's more like Schrödinger's box. If someone is pitching me in December, they can make a case that their current uptick in revenue is sustainable. Without the option to wait a few months, I have to decide if I believe those claims. The claims might be spin, but usually they're honest beliefs backed by a small amount of data. But once Jan and Feb KPIs come in, the data shows if the uptick will actually be sustainable. It's like opening Schrödinger's box and finding out whether the cat is alive. Now it doesn't matter what the founder believes or hopes because I'll be looking at the data -- and often the data isn't perfect, which hurts the ability to fundraise.