5 ms·

It's not so much that "yes" means "no" but that VC's never actually say no, and it's easy to understand why. Whether or not they actually fund you, they always

by lisper 3y ago

It's not so much that "yes" means "no" but that VC's never actually say no, and it's easy to understand why. Whether or not they actually fund you, they always want you to think that they are going to fund you because that way they hedge their bets in two ways. First, if they learn new information (like if you suddenly start to get traction) they can change their minds without losing face. Second, and more importantly, as long as the answer is actually no you are potential competition for some other company that is actually in their portfolio, so they want you to think that you have a shot with them so you won't pursue other opportunities as aggressively. The only thing that actually means "yes" in VC land is when the check clears.

jakey_bakey 3y ago
Solid summary tbh. It's all about incentives really.
hinkley 3y ago
If they run down your clock because you think a check is coming, their other company can hire your former employees.
- maccard 3y ago
  I'm not going to say this has never happened, but I think it's a little naive to think that this is the common path. In my experience, the first option OP presented (hedging bets and wanting to save face) are incredibly common.
  - hinkley 3y ago
    Naïveté is when someone assumes good outcomes from bad situations. What I'm exhibiting is probably more correctly described as cynicism. I've worked for a few startups that were sure they were hearing 'yes' from VCs and we ended up running out of money thinking a check would come any day now. There's an old saying, "I'll believe it when I see it." Cynics and startup employees expanded this to, "I'll believe it when the check clears." And then there's me over here, who knows you can claw back a check that has 'cleared' for about 30 days, saying "I'll believe it a month after the check clears."
marcell 3y ago
Disagree, I’ve heard “no” from dozens of VCs. They sometimes even give a post hoc rationalization.
personjerry 3y ago
That's what the article says
Aurornis 3y ago
Top tier VCs will definitely tell you “no” and they’ll often get there quickly. It’s more often the small funds, the inexperienced family offices, and the junior associates that don’t have authority who string companies along forever. They don’t have as much authority or funds to actually work with, so they have a lot of time to string you along. Lumping all VCs together really doesn’t lead to accurate descriptions of how the industry works.
- FreakLegion 3y ago
  This is the most accurate comment I've seen here. Sequoia, Benchmark, Kleiner, etc. will all tell you "no" and why with minimal turnaround time. The same is true for second-tier players like Craft, smaller shops started by breakaways from the big firms, and scouts. Good VCs are professionals and have no interest in wasting your time or theirs. A "no" now never precludes future participation anyway; they don't need to string you along for that.
  - mbesto 3y ago
    Which actually reinforces the grandparent's point. Sequoia, Benchmark, Kleiner, etc. can say an actual "no" and you'll still go back to them because they're...Sequioa, Benchmark, etc. You'll go back to them, because its a huge signal to prospective buyers, potential acquirers, partners, etc. that you're being funded by a top tier VC. > Good VCs are professionals and have no interest in wasting your time or theirs. "Good" VCs has less to do about professionalism and more to do about pedigree. Professionalism and "good"/"bad" VCs are not mutually exclusive things.
    - FreakLegion 3y ago
      The grandparent said "VC's never actually say no". I did the opposite of reinforce that. Every good VC will give you a version of the following if it's a "no": 1. It's a "no". (Clear, unambiguous.) 2. Here's why. (E.g. not believing in the space, issues with customer background or another part of due diligence.) 3. We make mistakes all the time and hope you prove us wrong. (I've pitched the partner at Sequoia who invested in FTX. His name's Alfred, super nice guy and fully aware that screwing up is part of his job. "No" isn't a value judgment.) 4. Happy to talk again for the next round. (If they're a multistage fund, e.g. you won't hear this from First Round.) It's all very predictable. The one real "why" you won't typically hear back on is strength of the founding team. They won't tell you when they think you're the problem. But product, space, GTM, basically anything else they're happy to dissect. This is true for all of the firms that people have heard of. Of course there's a long tail of bad VCs, too, generally podunk firms few people ever encounter anyway. Avoid TechOperators out of Atlanta, for example.
_heimdall 3y ago
Serious VCs often will say no, and they'll say it quickly. Honestly I prefer the approach of being extremely straightforward with expectations. Make your pitch, but also make it clear that you aren't interested in playing games and would prefer a clear "no" if that's the decision.

by lisper 3y ago

jakey_bakey 3y ago

Solid summary tbh. It's all about incentives really.

hinkley 3y ago

If they run down your clock because you think a check is coming, their other company can hire your former employees.

maccard 3y ago
I'm not going to say this has never happened, but I think it's a little naive to think that this is the common path. In my experience, the first option OP presented (hedging bets and wanting to save face) are incredibly common.
- hinkley 3y ago
  Naïveté is when someone assumes good outcomes from bad situations. What I'm exhibiting is probably more correctly described as cynicism. I've worked for a few startups that were sure they were hearing 'yes' from VCs and we ended up running out of money thinking a check would come any day now. There's an old saying, "I'll believe it when I see it." Cynics and startup employees expanded this to, "I'll believe it when the check clears." And then there's me over here, who knows you can claw back a check that has 'cleared' for about 30 days, saying "I'll believe it a month after the check clears."

marcell 3y ago

Disagree, I’ve heard “no” from dozens of VCs. They sometimes even give a post hoc rationalization.

personjerry 3y ago

That's what the article says

Aurornis 3y ago

Top tier VCs will definitely tell you “no” and they’ll often get there quickly. It’s more often the small funds, the inexperienced family offices, and the junior associates that don’t have authority who string companies along forever. They don’t have as much authority or funds to actually work with, so they have a lot of time to string you along. Lumping all VCs together really doesn’t lead to accurate descriptions of how the industry works.

FreakLegion 3y ago
This is the most accurate comment I've seen here. Sequoia, Benchmark, Kleiner, etc. will all tell you "no" and why with minimal turnaround time. The same is true for second-tier players like Craft, smaller shops started by breakaways from the big firms, and scouts. Good VCs are professionals and have no interest in wasting your time or theirs. A "no" now never precludes future participation anyway; they don't need to string you along for that.
- mbesto 3y ago
  Which actually reinforces the grandparent's point. Sequoia, Benchmark, Kleiner, etc. can say an actual "no" and you'll still go back to them because they're...Sequioa, Benchmark, etc. You'll go back to them, because its a huge signal to prospective buyers, potential acquirers, partners, etc. that you're being funded by a top tier VC. > Good VCs are professionals and have no interest in wasting your time or theirs. "Good" VCs has less to do about professionalism and more to do about pedigree. Professionalism and "good"/"bad" VCs are not mutually exclusive things.
  - FreakLegion 3y ago
    The grandparent said "VC's never actually say no". I did the opposite of reinforce that. Every good VC will give you a version of the following if it's a "no": 1. It's a "no". (Clear, unambiguous.) 2. Here's why. (E.g. not believing in the space, issues with customer background or another part of due diligence.) 3. We make mistakes all the time and hope you prove us wrong. (I've pitched the partner at Sequoia who invested in FTX. His name's Alfred, super nice guy and fully aware that screwing up is part of his job. "No" isn't a value judgment.) 4. Happy to talk again for the next round. (If they're a multistage fund, e.g. you won't hear this from First Round.) It's all very predictable. The one real "why" you won't typically hear back on is strength of the founding team. They won't tell you when they think you're the problem. But product, space, GTM, basically anything else they're happy to dissect. This is true for all of the firms that people have heard of. Of course there's a long tail of bad VCs, too, generally podunk firms few people ever encounter anyway. Avoid TechOperators out of Atlanta, for example.

_heimdall 3y ago

Serious VCs often will say no, and they'll say it quickly. Honestly I prefer the approach of being extremely straightforward with expectations. Make your pitch, but also make it clear that you aren't interested in playing games and would prefer a clear "no" if that's the decision.