17 ms·

VCs aren’t your friends

553 points by taubek 2y ago

Mikho 2y ago
Jason just wasn't into it and invented a random reason to say no... and brag about it—after all, his day-to-day job is constantly tweeting, bragging, and pretending about giving advice to become visible for startups and get the deal flow at the same time showing those SaaStr conference goers to keep participating and paying. If numbers in the deck were impressive for the economics work for him personally, he would be begging founder to take his money despite any date or any other imperfections in the deck. But the numbers weren't. And Jason used it as a reason to remind about himself one more time to the public.
hiddencost 2y ago
Every blog post about VC should have a disclaimer with the interest rate at the time of writing.
- AnarchismIsCool 2y ago
  What do you mean?
  - zaptrem 2y ago
    When interest rates are lower, money is easier to come by so terms are usually more favorable to founders.
  - joegibbs 2y ago
    You can't compare VC behaviour when interest rates are low to when they're high, because when they're low they're handing out money to anyone with a pulse, and when they're high they're checking if pitches say March instead of May.
- dheera 2y ago
  Why should VCs care about interest rates? They're looking for 30000% returns from 1/100 of their investments while the rest go to 0. They aren't interested in your measly 5%
  - baq 2y ago
    yeah well if their cost to lever up is suddenly 6-7% instead of 1% some perceptions change
  - dustingetz 2y ago
    interest rate changes shift optimal balance of stocks vs bonds at hedge fund scale, altering prices which rebalances vc allocation in LP portfolios (targeting some fixed %) as well as impacts the velocity and price of IPOs which proceeds are reinvested into subsequent venture funds
  - michaelt 2y ago
    Because VCs need to get investors, meaning they're competing with other investment opportunities. When interest rates were 0.5%, a high-risk investment with a 12% return looked pretty attractive. So lots of people were handing over money to VCs. As they had wheelbarrows full of other people's money they were required to spend they didn't look too closely at what they were spending it on. Now you can get 5.5% risk-free from a bank account, that high-risk VC fund looks a lot less attractive. As VCs have much less cash they need to spend, they can be a lot more selective.
moralestapia 2y ago
>A VC receives 10 to 50 decks per week. Out of those, 10% are hot: think OpenAI. >1-5 OpenAIs per week Yeah, ok man, quality blog post incoming.
- drones 2y ago
  I actually laughed when I read that
- billybones 2y ago
  I didn’t read this as “10% will become 100B businesses”, I read this as “10% are hot”—probably the author meant “like a team out of OAI” but maybe they meant “like recent rounds of OAI have been”. In any case this post read as sophisticated, reasonable, and helpful, to me.
  - moralestapia 2y ago
    It's orders of magnitude off. The guy is just LARPing poorly, even lacking common sense. One single OpenAI-tier deal every two years, consistently, would put you into Legendary VC territory.
    - reducesuffering 2y ago
      What a colossal failure of OpenAI’s nonprofit charter that they’re repeatedly in a conversation about being good VC returns.
    - lmeyerov 2y ago
      I read that comment a bit differently: - Volume: Former founders who hit the jackpot are investing in a bunch of startups every week. There are hundreds of unicorns etc out there, and thousands of Series A's every year. That's a bunch of competitive deals being signed every day! - Quality: Early silicon valley startups can easily look like openai's early days. With hundreds of unicorns out there, their execs eventually leaving and recruiting smart folks for their next thing happens almost every day. Pitches that are "We're solving X" are a dime a dozen. Likewise, they're each flawed in different ways -- in OpenAI's case, an easy negative phrasing is: no real business plan, positioned mostly as a non-profit R&D lab that'd do open source for Elon Musk to get google IP more easily. Likewise, having Stripe's CTO was one of those cool unicorn exec things, but for 0->1 business, maybe not so obvious, and Sam Altman's only 0->1 gig was running a small failed social mobile social network. It's easy to phrase in positive vs negative lights. Now imagine getting 5 of those on your desk every week, and you only pick 0-3 a year, hoping each win pays for all the duds, and then some...
EGreg 2y ago
I heard from Reid Hoffman himself that he approached 99 VCs before he got funded. He had two meetings in one day. The first he was asked whether it’s B2B or B2C. He said B2C and was told they only fund B2B. Then next one he said B2B but they said they only fund B2C. Meanwhile, some startups are funded by VCs piling on, and then go bankrupt quickly.
- threeseed 2y ago
  Average for pre-seed/seed is about 80. And there was recently a guy who did 400 investor meeting to get a single yes.
DeathArrow 2y ago
Nobody in business is your friend. Friendship isn't about money and money isn't about friendship.
deleted 2y ago
[deleted]
andrewstuart 2y ago
The is all "investing theater", in which stuff other than the business and product is what the VC uses to make a decision.
- stanleydrew 2y ago
  It's not. VCs are investment professionals and are trying to avoid adverse selection just like everyone else. Here's a relevant quote from a recent Matt Levine newsletter: > I think that, if you had only five minutes with a world-class trader, and you asked her “teach me the essentials of trading,” probably she would spend the five minutes on adverse selection. The essential lesson is that, if you are being offered a trade, that probably means it’s a bad trade; your job is to understand that thoroughly so you can figure out the exceptions.
bruce511 2y ago
In so many ways raising funding is just like applying for a job. Here's what I can do, give me money. The only difference is that the VC pays you your salary (and all your other expenses) in advance. And let's you keep some of the upside. By contrast an employer pays you a salary, and your (work) expenses as you go. The VC "implies" by their funding how long your contract is. The employee goes "forever". So all the things that apply to job-hunting apply to VC funding (Amplified). And make no mistake, the VC becomes your boss. Once you understand it in these terms you can best evaluate if VC funding is for you.
- skrebbel 2y ago
  > the VC becomes your boss Only if you give them board control.
  - pavi2410 2y ago
    If someone gives you money, they become your boss
    - lotsofpulp 2y ago
      Want to test that? I will volunteer to be the recipient.
  - pyrale 2y ago
    … Or if you expect to ever raise money again.
    - drdrek 2y ago
      Not exactly correct, you are now partners. You own X% of the company and they own Y%. If you want to continue raising you better not be that guy that is constantly fighting with their partners... but your partners are definitely not your bosses.
throwaway42668 2y ago
The problem with the “signal” is that it’s based on pretty much nothing. It is just as valid or nuts as any other ad hoc random tea leaves & chicken bones “signal” someone decides to come up with a dubious justification for. Whether the deck said March, April, or May changed absolutely nothing about the underlying business and thus also nothing about the actual investment opportunity. Maybe they made the deck two months ago and spent the last two months prosecuting pipeline and closing deals? Maybe they didn’t have a great investor network, so it took them a month or two to even be talking to the right investors (which more often than not is actually what’s important, and only superficially any given pitch or deck)? Maybe the VC in question was their first choice once they learned they existed and what their thesis is? It’s absolutely true that VCs aren’t your friends. They’re middlemen for distributing other people’s money who pick winners at such a low success rate that one could be forgiven for wondering if random lottery might do just as well. In terms of actual performance and criteria, they’re more like clergy. There are various performative religious traditions and ceremonies that have to be serviced and abided if one is to have any hope of them bestowing their blessings.
- earnesti 2y ago
  The deck from March says that they have been sending the deck around since March, and are still looking for investments. It might be meaningful, but would have to measure how quickly the typical funding rounds are made for successful companies, to have an "academic" argument about it. However it doesn't really matter, a VC can invest for whatever reasons he wants.
  - shawabawa3 2y ago
    Also the fact they haven't updated their deck in April/May means they didn't have any huge growth in march/april/may to brag about, or even they had bad march/april/may results that they want to hide
    - throwaway42668 2y ago
      Whatever the reason. The VC objection is nonsense of the fortune cookie wisdom variety. We (venture backed founders) tolerate it because we need the inane spiritual blessings of these dubious kingmakers to make our world go around. So we smile, nod, grit our teeth, and move on to the next one. But none of them are secret geniuses with a unique skill to predict the future based on random made up nonsensical “signals”. They’re herd animals where survivorship bias has a reinforcing function until a point where being luckiest longest makes it possible to put a finger on the scale of outcomes to make raising subsequent funds easier, makes it possible to set the trend the herd follows, and makes it possible to somewhat curate outcomes (“soft landings” instead of insolvency) for your portfolio. Every single unicorn and/or significantly exited startup has a pile of VC rejections that’s miles high. The trick as the founder is to just figure out how to find better aligned investors. Typically ones who aren’t high on the ego trip of being an accidental kingmaker. Take the “feedback” like that of the VC in the post for what it is… complete nonsense from someone who’s accidentally successful enough to get away with such a silly criteria because nobody wants to insult the cult clergy to their face in case you might need their blessings at some point yourself… and move on. Successfully raising money is first an exercise in qualifying who the right investors/funds are for what you’re doing as a venture and second it’s an exercise in number of shots on goal you can make in as short a period as possible until you find one, “Yes”. Full stop.
caseyy 2y ago
Most business founders don’t need VC money and are worse off for taking VC money. I find the mindset “my pitch deck was 2 months old so I didn’t get funding” very out of touch of business realities. It is far more likely that that type of business doesn’t need VC funding. Your SaaS can probably be built with your daytime developer salary. No VC ever says “wow, what a great investment opportunity, one of the best, but the slides were old”. You don’t even need the slides, or the rehearsed elevator pitch. Just build a business that’s worth VC money (solid, profitable, and ready to scale up) if you absolutely insist on it.
- __loam 2y ago
  Profitability is optional.
  - caseyy 2y ago
    Profitable companies attract much more VC interest and even competition.
    - tomnipotent 2y ago
      Doesn't a VC make money from valuation, not profitability. A profitable business has either reached market potential, or isn't spending enough on growth. Anecdotally I can think of many more examples of unprofitable businesses getting VC money.
      - stanleydrew 2y ago
        > A profitable business has either reached market potential, or isn't spending enough on growth. Yes, but spending money on growth is probably the number one thing VCs like to invest in. If you happen to be profitable, but also can demonstrate a clear path to growth, then VCs will lean in.
      - devoutsalsa 2y ago
        Not counting their 2% annual maintenance fee, a VC makes money from buying shares low, selling them high, and keeping 20% of the high price minus the low price. So yes, they make money if the valuation is higher than the when they bought it. Example: - buy 1 million shares at $1. - sell 1 million shares for $101. - (101 - 1) * 1_000_000 = 100_000_000 - 100_000_000 * 0.2 = VC gain of 20_000_000
keiferski 2y ago
The way VCs filter out potential investments seems fairly similar to the way Ivy League schools filter out potential students. (Probably because they are comprised of the same people.) It is not really about technical brilliance, or innovation, or anything that is written on their website as a core value. It's more about whether you're smart enough and can follow instructions and fit into the overarching institutional structure of school and work. For companies that are at the point of raising venture capital, this might be what is actually needed. But it certainly seems like it filters out a lot of the more idiosyncratic, brilliant types that aren't concerned with (from their perspective, irrelevant) details, like the date on a pitch deck. It seems like a good way to get institutional operators, not rare but not-quite-conformist innovators. I can't imagine someone like Steve Jobs or Nikola Tesla passing these VC/Ivy League kinds of tests.
- smabie 2y ago
  If you're brilliant and idiosyncratic and delivering something truly compelling, then vcs are more than happy to look past these things. God knows how many very eccentric founders have received funding
  - max_ 2y ago
    It is impossible for something in very early stages, that needs money to be "truly compelling". For VCs a compelling product means great traction but to get great traction you need initial funding so it's always a catch 22.
    - MichaelZuo 2y ago
      Not if they are a bonafide super genius, then it's entirely possible. That's the minimum bar without traction however. A regular genius isn't that impressive.
      - kabouseng 2y ago
        VC's don't have the ability to distinguish between genius and super genius...
jrflowers 2y ago
I love this blog post about why Jason Lemkin’s post about passing on a pitch because the pitch deck said March instead of May is a good and normal post. Without this informative content we would not know that Jason Lemkin‘s post was not at all off putting or ridiculous, and we are rightfully brought up to speed on how cool it was, in fact.
- input_sh 2y ago
  Also, "caused an outrage" apparently means "barely got any traction". <200 likes, barely any retweets, even the 30 or so replies weren't as confrontational as I was lead to believe by that intro. I guess "VC was wrong and nobody really gave a shit" doesn't have the same ring to it.
  - jrflowers 2y ago
    >I guess "VC was wrong and nobody really gave a shit" doesn't have the same ring to it. This is a good point. When something looks like Jason Lemkin posting something ridiculous on social media, it is actually an opportunity for us to learn of both his fame and the normalcy of his opinions, as well as to be reminded of the high portion of VCs that are good human beings.
  - wasteduniverse 2y ago
    [dead]
anonzzzies 2y ago
We had a vc that was my friend; not anymore; we failed and he felt betrayed we ‘gave up so easily’ (we didn’t). I guess a better one is; VCs should not be your friends.
LAC-Tech 2y ago
"The logos good, fine." LOL
morgunkorn 2y ago
VC stands for Vampire Capitalist, right?
braza 2y ago
For folks that are working on a product right now, given the incentive structures behind venture capital, are there genuine reasons to pursue that kind of money? Let me rephrase: How many folks out there are searching for for some kind of niche business with enough to cover expenses and had some profit in a small scale? I had a short experience with the music industry and the whole enterprise + VC sounds the same dynamic between artists and record labels back in the day, where was not enough to play in local bars and have a steady presence there, but everyone wanna to be Metallica or Anthrax.
- robertlagrant 2y ago
  Any business that needs up front capital needs to get it somehow. E.g. develop a medical device that has years of development, testing, and regulatory lead time. Who pays the salaries and for the laboratories and studies? It's either: only allow companies that are already big to do new things, which they often aren't geared for in various ways, or have a mechanism to allow capital into new businesses from outside, that comes with certain expectations. You're free to decline both the capital and the expectations, of course, because this is a free agreement made between two parties.
- earnesti 2y ago
  If you have a business that can get off the ground without funding, great. That just isn't reality for most. There is maybe some people who raise money "because it is cool", but I would think it is in the minority. If you have a business that is profitable, you are happy with the growth, etc, there is little sense in going to the investors begging for money. The couple bootstrapped businesses I have seen didn't have much interest in raisin.
  - borgdefense 2y ago
    [flagged]
- indigochill 2y ago
  I've never heard of a musical group or artist who can make a sustainable living on just a local scene (although maybe that's rather the point, since they stayed local to wherever they are). Even for huge artists, from what I've heard merch is where the money is, not ticket or record sales (or today, streaming, which is _ludicrously_ tilted against the artist actually making any money). Admittedly I last looked into this around twenty years ago and my sample is tilted more towards the folk singer-songwriter type rather than, say, DJs. That's not to diss local artists, though. Some are incredibly talented, and I loved the scene I was in it. Just, if we're talking about investing, making music looked like 9 times out of 10 a money sink you do for the love of it, not an investment opportunity.
factorialboy 2y ago
Do VCs need regulation? Should we ensure equity for diverse founders?
- earnesti 2y ago
  Yeah, why just VC's, force everyone to invest. There is a lot of rich ppl in the world who don't invest to startups at all. That is wrong. We should have a law that requires at least certain % of net worth to be invested in startups.
claudex 2y ago
> VCs aren't your teachers nor your managers. They don't have an obligation to provide feedback or even to reply to your emails. They won't give you a second chance. They won't coach you so you can do better next time. Seems like the typical teacher or manager to me.
- siva7 2y ago
  Spot on.
yard2010 2y ago
I don't know if this person realizes that he basically asks people to lie in the future and make a custom deck with custom dates and custom jokes to each angel. It's just a part of a bigger short sighted system tho, hate the game not the player
zandrew 2y ago
One of the things I'm surprised isn't covered more is the liquidation preference that VCs take... an investment is basically an extremely expensive loan. If shit hits the fan, they are entitled to the payout of up to their original investment, so all of the company's assets, when liquidated, fund those proceeds. If your company succeeds, the VC owns a percentage of your success.
- earnesti 2y ago
  The reason for that is that there is very high likelihood that the "loan" will never be paid back. It is just a market. As far as I understand from the statistics, VC's are not making great money, on average. Average startup gets the funding, uses it for salaries and everything else, and never pays the investor any substantial amount back.
- csomar 2y ago
  The interest rate on the loan, is your ROI. This is reasonable because it's a very risky loan. > If shit hits the fan, they are entitled to the payout of up to their original investment, so all of the company's assets, when liquidated, fund those proceeds. I thought all loans are structured that way? I am not sure why this should not be the case here.
xyst 2y ago
If there’s one thing ChatGPT could replace: developing “pitch decks” and “cold emails” for vulture capitalists. Train LLMs using this site and reap that (dangerous) VC money.
bjornsing 2y ago
If there’s anything to be irritated about here it’s that yet another VC revealed how absolutely moronic their job is. Any idiot can look at some slides and see if the numbers are good. The hard part is finding the gems in those bottom 90%. Sadly nobody seems to be doing that.
andy_ppp 2y ago
VC really is the A&R of our time.
- selimthegrim 2y ago
  I guess that’s what they meant by “tech is the new music”
RACEWAR 2y ago
I may be betraying a certain level of cultural literacy for the bulk HN demographic but the original tweet reminds me of when popular online vixens (e.g., Instagram models) talk about “who slid into their DMs”.
avereveard 2y ago
more genreally, two companies cannot be friends
leashless 2y ago
Remember: if VCs believed in what they were doing they would not take a 2% annual management fee and 20% of the upside. They’d take 40% of the upside and live on ramen noodles. VCs make money by raising money from LPs. They spend this money on investments which don’t look too bad if they fail, because nearly all of them fail. Looking good while losing all of your investors money on companies which go broke is the key VC skill. Once in a while you get a huge hit. That’s a lottery win, there is no formula for finding that hit. Broad bets helps but that’s about it. The “VC thesis” is a fundraising tool, a pitch instrument, it makes no measurable difference to success. It’s a shtick. Sympathy, however, for the VC: car dealership sized transactions paired with the diligence burdens of real finance. It’s a terrible job. Once you understand that VC is one of the worst jobs in finance and they don’t believe most of their own story — it’s fundraising flimflam for their LPs - it’s a lot easier to negotiate. 1) we are a sound bet not to get you in trouble if we fail (good schools and track records) 2) we will work hard on things which your LPs and their lawyers understand, leaving evidence of a good effort on failure 3) we know how the game works and will play by the unwritten rules: keep up appearances The kind of lunatics who actually stand to make money with a higher probability than average - the “Think Different” category - usually violate all of these rules. 1) they have no track record 2) they work on esoteric nonsense 3) they look weird in public And they’re structurally uninvestable. Once you get this it’s all a lot easier: the job of a VC is not to invest in winners, that’s a bonus. The job of a VC is to look respectable while losing other people’s money at the roulette wheel, and taking a margin for doing so. I hope that helps.
- tomp 2y ago
  This doesn't make sense. I worked in hedge funds, even there the management fee (2%) covers the fixed costs (legal, trading operations, treasury, IT operations, etc.) whereas the performance fee (20%) incentivises the alpha. In VC it's even worse, because at least hedge funds are liquid. VC investments don't realize their value for 5-10 years! Are they supposed to work for free for 10 years? Even the support staff?
  - leashless 2y ago
    Take 40% and raise capital for the VC operations as a separate transaction than from the LPs, of course. Efficient markets.
bigbacaloa 2y ago
[dead]
techterrier 2y ago
If startups are a casino, VC's are Tony Soprano, offering you another 100k after you've already lost everything you have. Smiling away, tell you it'll all be fine.
jojobas 2y ago
Nobody is your friend by default. Not bosses, not employees, not colleagues, not vendors, not customers. It's dumbfounding that adults need to be reminded that.
- barrenko 2y ago
  Not your spouse*
kreck 2y ago
Just an anecdote (no judgement here; VC has its place): An acquaintance of mine who works for a VC firm once said "Ultimately, VC money is a loan for people who are not bankable". That really resonated with me as with that perspective I understood why behavior & practices are closer to what you'd experience if you personally need to take out a loan outside of the regulated banking system
- saberience 2y ago
  The whole "hate VCs" thing is kind of silly in my opinion. VC wouldn't exist if founders didn't want and need capital and have no other way of getting it. Also, for every other "evil VC" story, there are other stories where founders are really happy with their VC board members, have a strong and positive relationship with their VC partners, and end up getting some kind of positive exit which wouldn't have happened at all without the investment. Sure, some VC companies may be shitty, some others may be amazing, but this is basically like everything in life. Some schools are shitty, some cops are shitty, some cars, tech companies, managers etc, are shitty. But some of all these things can also be great and awesome too. Thats life.
  - kreck 2y ago
    I generally agree. Maybe to add to your argument: A - Just as with customer reviews on amazon unhappy customers are often times the majority to leave a review whereas fewer happy customers voice their opinion in the form of a review. I suspect the same goes for VC interactions. B - Due to the way the VC business is structured the variance in "quality" of VCs is heavily skewed and not normally distributed, tricking our perception of what to expect. In other words i suspect that you have a much higher likelihood in to interact with a very "low quality" VC or absolute "top VC" than with an "average" VC. If you amplify this with A you may get an even worse public opinion. Nevertheless I think on an individual basis you're always better off if you don't need VC for your business - if you have that option.
  - cageface 2y ago
    VC wouldn't exist if founders didn't want and need capital and have no other way of getting it. This is too reductive. A lot of founders have to raise because they're competing with other companies with VC funding, often dumping their product on the market at a loss to starve out bootstrapped competitors and lock in customers.
RileyJames 2y ago
> A VC receives 10 to 50 decks per week. Out of those, 10% are hot: think OpenAI. lol.
- csomar 2y ago
  The 0% interest era did wonders for this economy.
TrackerFF 2y ago
Some people will give a shit, some won't. I've met VCs that would scoff at Jason for trivial stuff like that, while I've met others that would agree with him - and maybe be even rigid about "small stuff". My experience is that if the VC is someone who has background from finance, consulting, or law, then they are more likely to lose their minds over superficial stuff like logo placement, font consistency, alignment of images / tables / etc., and of course consistency in dates etc. - probably because that's all they did during their formative years in their respective industries. Second point: There's a bunch of VCs out there with the only qualification of A) Having founded / led a successful startup B) Having invested in startups during the ZIRP-era So while you have some tremendously good VCs that have stood the test of time, and have "seen it all", there are also VCs that will be washed away the next few years. So don't take it personally if / when some VC will decline you and and be all preachy about it. Last point: Some of these stories are just made-up BS to generate content and thoughts. Half of the stuff VCs write on LinkedIn or Twitter seems to be fiction, for the sake of getting a point through to their listeners. Also keep that in mind.
Kalanos 2y ago
VCs make steep graphs steeper. By the time you are in a position to raise money for acceleration, you don't really need it. All capital, no venture.
cajunboi34213 2y ago
In my experience founders that have raised vc regard them as bankers. Founders who haven't successfully raised (for whatever reason) and people that dream about being founders postulate on these things. Funding is simple. Seed or before you/team are fundable, based on some signal of you've done it or can do it. Post seed, it's not you, it's the business. If in 2 months you haven't gotten interest or intros, you're business is not VC fundable, or you suck at fundraising which means you're probably not the right venture backable CEO.
- drdrek 2y ago
  Bankers with good PR. But for the first time founders out there please don't sweat it if you can't get funded for a long time, you may just be early. I gave up on a great idea (that my partner later worked into a great product within an existing company) because we were unable to get funded for 3 months. And later got VC funded after working on a worse idea for a year. It can take time, It may require you to get customers first, but if you get along with your partners and can see business progression don't worry to much about VCs, they are mostly capricious up until the point you can show that its a good business. Then they are, as OP said, just bankers.
  - cajunboi34213 2y ago
    first time founders that have large followings in the community they are building for are the most fundable. Reason being, your first product or iteration will fail, but if you have a captive audience willing to try and give you feedback you're in the best position to achieve product market fit.
    - drdrek 2y ago
      My career is focused on B2B so I don't know a lot about communities, but the sentiment is the same. You have an edge if you know a lot about a subject and have good connections with professionals in the field that are willing to talk to you. But I would say VCs usually prefer a team as its more likely to check all the boxes. I've heard 3 as the "optimum" for team resilience vs founding team social complexity, but that is just a general sentiment. If you have a community get a tech guy, if you are a techy get a product guy, if you are a product guy get a sales guy, etc. Don't try to be an ubermensch, just find a team you can work with.
leashless 2y ago
Let me throw in one other tip for founders looking to get funded: do not ignore regional VCs. Most of the stories about "how VC works" are 10, 15 years out of date. The cultural "sense of things" lags behind the reality. We found this out the hard way. In fact, contrary to all expectations and myths, VCs (outside perhaps of the top 50 or 100 firms?) read their emails and take cold meetings. They have to. Every region in the world has some clone of Silicon Valley - technical universities and accelerators and incubators and funds - and most of them have very little deal flow or exposure to outside opportunities and ideas. The guy from a second tier French city part-funded by an Economic Development Agency has as much luck getting into a deal with Union Square as you do. But he still has money to invest. So most of the VCs outside of a small, narrow set do answer emails, are glad to be approached, and are basically glad to see you if you've got anything at all which is interesting to say. It doesn't cost much to try, either. It's the price of an email. Yes, warm intros to top tier VCs are really handy. But that's also why the top tier VCs are so massively subject to group think and wind up collectively dropping five billion dollars on electric scooters and stuff like that. Everybody is human. Everybody is here to do the deal. At the top of the chrome towers are men and women in shoes and socks trying to look good to their management. Nothing behind the curtain, no wizard of oz. Do what you can. Don't break yourself for the myths. Do intelligently bet the odds! Tech is going to be the dominant story in human history for the rest of our lives in almost all scenarios. It's not a bad industry to be in. It's just the financial side of that industry is really heavy on the mythology and maybe that's holding us back now.
- petesergeant 2y ago
  I feel like my entire takeaway from a business-y degree at a rather good university kinda boiled down to “don’t go to European VCs, they’re mean and valuations are bad, while providing no upside”. Will be raising on an idea that makes me look at least a little bit like a lunatic in four weeks’ time, so keen to see how this is born out!
frank_bb 2y ago
[dead]
j7ake 2y ago
Don’t do business with people who think putting the wrong date matters.
openrisk 2y ago
In transactional financial markets "friends" is not the right word, but there is something to be said about more or less effective alignment of interests and that is purely a matter of design. There is more than enough money sloshing around, it all boils down to designing contracts and suitable information exchanges between parties. So anybody thinking that the current system is sub-obtimal can try their hand at disrupting the VC system and making history :-) An arrangement that better utilizes the majority of the entrepreneurial crowd's energy and time is likely to at least carve a niche, if not dominate. It may not even be that hard. The chasing of planet-scale returns (with the corresponding discounting of the rest 99.99%) is a recent phenomenon and may be just an aberration.
- benreesman 2y ago
  Financial accountants have a line item for not being a dick. It’s called “goodwill”. No shit.
  - bombcar 2y ago
    Goodwill is like dark matter; they have to account for value increases or decreases when doing double entry bookkeeping so they invented goodwill for that.
    - benreesman 2y ago
      The trivial necessity of valuing the intangible of being well-liked by one’s customers and partners has nothing to do with positing definitionally unobservable mass. The cost and effort and intellectual integrity burnt on linking that mass to bosonic super partners even after a six sigma result at CERN on scalar field excitation at 125 GeV was found exactly as everyone knew it would be without a squark in sight is very on brand for what passes as rigor around here these days.
  - gumby 2y ago
    Ha ha, this is both hilarious and so true!
- 2y ago
imglorp 2y ago
> the OpenVC pitch deck tutorial explicitly says to never include the date on your cover. Careful, there's often metadata in a deck, if you know how to look.
tlogan 2y ago
VCs primarily provide capital, and that's their essential role. They aren't there to be your friends or mentors. Remember, if you mix friendships with financial asks, you risk losing those friends. So, VCs are a great resource for funding, perfectly suited for what they're designed to do!
- mepiethree 2y ago
  Some of them do like to pretend to be your friend after they’ve invested, though. Don’t fall for it :)
uptownJimmy 2y ago
I remain confused as to why anyone would take VCs seriously at all, much less want to be friends with them. They mostly give strong vibes of "sociopath" and "malignant narcissist".
airstrike 2y ago
Pro-tip: when I was in M&A, I would always write the season rather than the month on the cover of materials sent to prospective buyers. "Spring 2024" sidesteps the issue entirely and the deck even survives being forwarded around for a few months.
curious_cat_163 2y ago
I wonder if any generalization as an attribute for all VCs is ever going to be a good enough. People call them “not friends” or “sheep” or whatever. But it has always felt like an unsatisfactory framing. It is a marketplace. The equity of companies is for sale and VCs are buyers. The buyers come with a variety of risk appetite, $ available to invest, personal histories and they all want very high ROI to justify staying in the business. Companies also have their own variety in ambition (TAM), track record (growth rates) and level of conviction of people who work there.
gwbas1c 2y ago
The tone of the post just reminds me of how frustrating interviewing for a (software engineering) job is: Many rejections are arbitrary and the best advice is to just keep applying. In this case, I suspect Jason assumes that every business should be 110% focused on fundraising. Well, businesses are trying to run their business! The goal is to run the business, the pitch is a tool, not the goal. The same thing applies to finding a (software engineering) job: Candidates have life obligations and can't dedicate 110% of their time to pleasing a single interviewer. The goal is to demonstrate that you can do a job, the interview isn't the job itself.
Gordon1188 2y ago
[flagged]
hackernoteng 2y ago
They might not be my friends, but they did pay 90% of my salary for the past 22 years...
- onhacker 2y ago
  When a VC wants to bankrupt it's competitor it's bad and most of them do the same
DrScientist 2y ago
Carnivorous sheep - is my favourite unflattering description of VC's. Ironically this I heard this from somebody who ultimately became one. Perhaps it's Zombie Carnivorous Sheep.
wslh 2y ago
> think of a VC as a sales prospect I think the problem with VCs is that, most generally, they are not good sales prospects, they are pedantic. A good sales prospect is someone who give you feedback, even automated, so you know where you are. Even if they receive a zillion of pitch decks every day (as it is noted in the article), they should have a better process in 2024 to handle that. I will give you an example as a customer which can be translated: I sent a simple problem to HubSpot and after many chats and email tickets they couldn't solve it! They are advertised as a top CRM, we are happy as customers but I feel there is nobody in the line. On the other hand we are customers of Bizneo for HR/PX and they are happy to make a call and help us. I would expect more feedback from VCs, they are more terrible than banks giving feedback, knowing that they are in a power position but that will not work for long time.
j45 2y ago
Not all VCs have the same investment thesis. Alignment and mutual fit is important. Being undiscovered and being found by a process is partially a positioning piece too. VCs want a transaction in a short number of years depending how far they are into their current fund. It’s not always about any one idea, but rather what idea can be the winner to make up for the others that didn’t win big. Also, knowing the difference between investors and VCs is important - investors tend to often give more personalized support than VCs. If you’re ready to go big and be supported to do so, VCs can be just what’s needed. Increasingly, VCs are a feeder system to private equity and you may be able to position yourself for that long term.
d_burfoot 2y ago
This is probably a good reminder. But you could write an article like this about every institution: - The police aren't your friends - Your employer isn't your friend - Your colleagues aren't your friends - The government isn't your friend - Small businesses aren't your friends - Big corporations aren't your friends - Elon Musk isn't your friend - Your landlord isn't your friend - Your professors aren't your friends There's no such thing as a relationship where the interests of both parties are perfectly aligned. And the pain caused by any misalignment will be more intense when the stakes are higher, such as startups/VC.
- jkaplowitz 2y ago
  The article is useful because, while most of your other examples don’t pretend to be your friends, VCs often do, at least at a superficial level. Understanding that this seeming friendship isn’t real is important. VCs do have a helpful role to play in funding many types of startups, but the role of investor is very different from the role of friend.
iamleppert 2y ago
What is more striking is that this VC felt it necessary to take to LinkedIn to "educate" others on his reasoning. For what purpose? So that people will remove dates from their slide decks now? Because that is the likely outcome. The only investors who have enough time for such things generally aren't the ones closing the best deals. What does it say about him that he is desperate enough for a deal that he has to open cold emails and then take to LinkedIn to criticize a date that is two months old? If you notice he didn't say anything about the content of the actual information being outdated. Just the date. His biggest gift to this company was not investing in them.
- nextworddev 2y ago
  He felt "triggered" that he wasn't the first call, which comes off as petty and entitled, which most VCs are.
toss1 2y ago
As the VC pointed out, the key here is the two-months-old date. But not exactly for the reason he stated. It is not that he isn't the first, so he's got thin skin or wants only founders who thought he was the best/first VC to approach (and smart founders might not take their first shot with their most favored VC as they'd want to hone their pitch with less-critical candidate VCs). The reasoning here is more likely that "other smart money has looked at this deal and passed", so he can leverage the efforts of these other unseen VCs who passed. This could be written off as lazy/cowardly 'herd mentality', but it is a real signal. It's also true that by definition, if there's a unique opportunity here, he's also missing it by grouping himself with the other VCs. But that is a negative-space signal, and the question is whether it's more likely determinative than the signal that "yeah, they also passed".
mandeepj 2y ago
> VCs aren’t your friends Congrats, good for you! You learned something new or probably forget something that you taught yourself.
chewbacha 2y ago
Moral of the story: Don't date your slides.
tptacek 2y ago
This is weird, because my understanding and experience of fundraising is that serious prospective investors never get deals from cold inbound slides; they've been introduced, and, most likely, have been talking to the company for months prior to a "formal" start to fundraising, in "no, no, we're not raising money yet, just looking for advice" mode, waiting along with 5-10 other investors for someone to preempt. This is like a whole mythology constructed around the idea that instead of networking and preparing, you apply to VCs as you would to a college. Does that ever work? I'm seriously asking. (YC doesn't count!)
- enra 2y ago
  As long as I been around startups, about 15 years, the advice always have been had more success getting warm intro. Even more back in the day than now. I think PGs essays lays out the fundraising process this way too. The advice is never just send deck to a VC. Same as just applying to a company. Private organizations have no need for any kind controlled process, you're always better having or building of personal relationships and convincing people directly first. It's often even about the pitch or pitching skills. It's more like relationship or case you build, then the pitching is just formal step to close the deal. I think the cold approach only works start the relationship if you have proven business, great potential and can tell that story well. But also by then VCs might already know about you and come to you. Otherwise it's always about building some level of personal connection first. Essentially you're asking to someone personally believe and bet their internal and external reputation on. They are not going to hand you the money after one hasty email and deck. The anti-VC crowd often try paint this as some kind of exclusive country club, but it's not true. So many new founders raise capital all the time. VCs are always looking for new founders and companies. But it's also true that if you just crawl out of the woods one day and go meet a VC and ask them for $2M is likely not going to happen. If you don't get a single person in the world with some kind of VC connection to make a warm introduction to you, it often considered as a filter that you're not serious enough about your business.
mateus1 2y ago
This is the George Costanza approach to VC: you go looking for some minor flaw, make a big deal out of it and then boast/complain to your friends. I know humans aren’t rational creatures but boasting how you make big investment decisions on a glorified pseudoscience call like you’re Sherlock Holmes is icky.
_yb2s 2y ago
I learned that VCs aren't my friends the hard way... they stole my company from me and left me with nothing. I discovered a promising new medical treatment- a small molecule drug with impressive experimental results. My name is on the patent and my co-inventors decided to form a startup and gave me co-ownership/stock, although I did some work to help get the company started I didn't want to leave my current job to be involved in full time running the startup at the level they were. They got big VC funding and the VCs reformed the startup as a new company. During the pandemic lockdown, trying to work at home while parenting a toddler with no childcare, I was sent a form to sign by a new VC firm funding the company, and I was so stressed with the pandemic situation that I just trusted them and signed it without reading it. The VCs cut me out entirely... just deleted my shares and ownership of a company based on tech I invented and patented. I can't revoke the patent rights either, because they already had a contract licensing it from my employer.
- zrn900 2y ago
  Can you expose the names and/or the company name of those s**stains?
  - _yb2s 2y ago
    I've spread the story around the biotech startup community in person, but can't share it here without de-anonymizing my HN account, which I would rather not do.
    - zrn900 2y ago
      You can use throwaway accounts.
dontupvoteme 2y ago
>Jason (star emoji) (uk flag emoji) SaaStr LDN June 4-5 (star emoji) Lemkin This person is famous? sounds like he's mad about being sloppy seconds `:)`
light_triad 2y ago
As one commenter mentioned it comes down to having suitable information exchange between the parties. Some VC said no to most big successes in SV at some point. I recommend watching a pitch competition with lesser known VCs and companies like Pitchforce. You realize how difficult it is to understand what people are building and why it could be big. Most VCs will not be users of the product or experts in the vertical and will use other signals, however imperfect or limited as is the case here. https://pitch-force.com/ https://pitch-force.com/
mrangle 2y ago
If this looks attractive to a founder: ""We want to be the first check in." "We add value" 'We are responsible investors". "We're in for the long run". "We back outliers" and the oh-so-famous "Let me know how I can be helpful". then what they should look for is a skilled operational partner with a high-ish IQ and a stable personality, almost certainly with access to money that can be used for bootstrapping the business. You know, a virtually nonexistent unicorn in the circles that most people operate. Someone who is as rare as the right spouse. That combination is worth a hefty percentage. VC money isn't optimal for the initial startup phase. Everyone will be happier, detail nitpicking will be nonexistent, and the VC involvement will be more natural at the point in which customer acquisition rate and the cost of that volume is outpacing revenue, which should be the exponential growth curve often in years 5-10. Sometimes an acquisition comes soon after. If a founder cares about their business, then asking VC to essentially be their startup partner is asking for trouble in a lot of instances.
llmblockchain 2y ago
As much as I dislike VCs, I didn't find the Twitter post to be that bad. I can see his point about the company being an almost, and on top of that getting warning "signs". It wasn't the fact that the date was a few months old, it was the fact they didn't care enough to update it before sending the deck. It was the fact they did the bare minimum (or less than minimum). I never really put it in words before, but I pick up a lot of these signs. From the way someone writes, to the way they text message, to the content they consume, to how they handle social dynamics like grabbing coffee together or a lunch. It all paints a picture of a person and/or team. These things matter. If they can't take their time to update the deck, they probably skimp out elsewhere.
fmajid 2y ago
Two-time founder here. I think this naivety reflects more unrealistic founder expectations raised by the bubbly fundraising environment of the ZIRP (zero interest rate phenomenon) than any fundamental change in VC.

553 points by taubek 2y ago

Jason just wasn't into it and invented a random reason to say no... and brag about it—after all, his day-to-day job is constantly tweeting, bragging, and pretending about giving advice to become visible for startups and get the deal flow at the same time showing those SaaStr conference goers to keep participating and paying. If numbers in the deck were impressive for the economics work for him personally, he would be begging founder to take his money despite any date or any other imperfections in the deck. But the numbers weren't. And Jason used it as a reason to remind about himself one more time to the public.

hiddencost 2y ago

Every blog post about VC should have a disclaimer with the interest rate at the time of writing.

AnarchismIsCool 2y ago
What do you mean?
- zaptrem 2y ago
  When interest rates are lower, money is easier to come by so terms are usually more favorable to founders.
- joegibbs 2y ago
  You can't compare VC behaviour when interest rates are low to when they're high, because when they're low they're handing out money to anyone with a pulse, and when they're high they're checking if pitches say March instead of May.
dheera 2y ago
Why should VCs care about interest rates? They're looking for 30000% returns from 1/100 of their investments while the rest go to 0. They aren't interested in your measly 5%
- baq 2y ago
  yeah well if their cost to lever up is suddenly 6-7% instead of 1% some perceptions change
- dustingetz 2y ago
  interest rate changes shift optimal balance of stocks vs bonds at hedge fund scale, altering prices which rebalances vc allocation in LP portfolios (targeting some fixed %) as well as impacts the velocity and price of IPOs which proceeds are reinvested into subsequent venture funds
- michaelt 2y ago
  Because VCs need to get investors, meaning they're competing with other investment opportunities. When interest rates were 0.5%, a high-risk investment with a 12% return looked pretty attractive. So lots of people were handing over money to VCs. As they had wheelbarrows full of other people's money they were required to spend they didn't look too closely at what they were spending it on. Now you can get 5.5% risk-free from a bank account, that high-risk VC fund looks a lot less attractive. As VCs have much less cash they need to spend, they can be a lot more selective.

moralestapia 2y ago

>A VC receives 10 to 50 decks per week. Out of those, 10% are hot: think OpenAI. >1-5 OpenAIs per week Yeah, ok man, quality blog post incoming.

drones 2y ago
I actually laughed when I read that
billybones 2y ago
I didn’t read this as “10% will become 100B businesses”, I read this as “10% are hot”—probably the author meant “like a team out of OAI” but maybe they meant “like recent rounds of OAI have been”. In any case this post read as sophisticated, reasonable, and helpful, to me.
- moralestapia 2y ago
  It's orders of magnitude off. The guy is just LARPing poorly, even lacking common sense. One single OpenAI-tier deal every two years, consistently, would put you into Legendary VC territory.
  - reducesuffering 2y ago
    What a colossal failure of OpenAI’s nonprofit charter that they’re repeatedly in a conversation about being good VC returns.
  - lmeyerov 2y ago
    I read that comment a bit differently: - Volume: Former founders who hit the jackpot are investing in a bunch of startups every week. There are hundreds of unicorns etc out there, and thousands of Series A's every year. That's a bunch of competitive deals being signed every day! - Quality: Early silicon valley startups can easily look like openai's early days. With hundreds of unicorns out there, their execs eventually leaving and recruiting smart folks for their next thing happens almost every day. Pitches that are "We're solving X" are a dime a dozen. Likewise, they're each flawed in different ways -- in OpenAI's case, an easy negative phrasing is: no real business plan, positioned mostly as a non-profit R&D lab that'd do open source for Elon Musk to get google IP more easily. Likewise, having Stripe's CTO was one of those cool unicorn exec things, but for 0->1 business, maybe not so obvious, and Sam Altman's only 0->1 gig was running a small failed social mobile social network. It's easy to phrase in positive vs negative lights. Now imagine getting 5 of those on your desk every week, and you only pick 0-3 a year, hoping each win pays for all the duds, and then some...

EGreg 2y ago

I heard from Reid Hoffman himself that he approached 99 VCs before he got funded. He had two meetings in one day. The first he was asked whether it’s B2B or B2C. He said B2C and was told they only fund B2B. Then next one he said B2B but they said they only fund B2C. Meanwhile, some startups are funded by VCs piling on, and then go bankrupt quickly.

threeseed 2y ago
Average for pre-seed/seed is about 80. And there was recently a guy who did 400 investor meeting to get a single yes.

DeathArrow 2y ago

Nobody in business is your friend. Friendship isn't about money and money isn't about friendship.

deleted 2y ago

[deleted]

andrewstuart 2y ago

The is all "investing theater", in which stuff other than the business and product is what the VC uses to make a decision.

stanleydrew 2y ago
It's not. VCs are investment professionals and are trying to avoid adverse selection just like everyone else. Here's a relevant quote from a recent Matt Levine newsletter: > I think that, if you had only five minutes with a world-class trader, and you asked her “teach me the essentials of trading,” probably she would spend the five minutes on adverse selection. The essential lesson is that, if you are being offered a trade, that probably means it’s a bad trade; your job is to understand that thoroughly so you can figure out the exceptions.

bruce511 2y ago

In so many ways raising funding is just like applying for a job. Here's what I can do, give me money. The only difference is that the VC pays you your salary (and all your other expenses) in advance. And let's you keep some of the upside. By contrast an employer pays you a salary, and your (work) expenses as you go. The VC "implies" by their funding how long your contract is. The employee goes "forever". So all the things that apply to job-hunting apply to VC funding (Amplified). And make no mistake, the VC becomes your boss. Once you understand it in these terms you can best evaluate if VC funding is for you.

skrebbel 2y ago
> the VC becomes your boss Only if you give them board control.
- pavi2410 2y ago
  If someone gives you money, they become your boss
  - lotsofpulp 2y ago
    Want to test that? I will volunteer to be the recipient.
- pyrale 2y ago
  … Or if you expect to ever raise money again.
  - drdrek 2y ago
    Not exactly correct, you are now partners. You own X% of the company and they own Y%. If you want to continue raising you better not be that guy that is constantly fighting with their partners... but your partners are definitely not your bosses.

throwaway42668 2y ago

The problem with the “signal” is that it’s based on pretty much nothing. It is just as valid or nuts as any other ad hoc random tea leaves & chicken bones “signal” someone decides to come up with a dubious justification for. Whether the deck said March, April, or May changed absolutely nothing about the underlying business and thus also nothing about the actual investment opportunity. Maybe they made the deck two months ago and spent the last two months prosecuting pipeline and closing deals? Maybe they didn’t have a great investor network, so it took them a month or two to even be talking to the right investors (which more often than not is actually what’s important, and only superficially any given pitch or deck)? Maybe the VC in question was their first choice once they learned they existed and what their thesis is? It’s absolutely true that VCs aren’t your friends. They’re middlemen for distributing other people’s money who pick winners at such a low success rate that one could be forgiven for wondering if random lottery might do just as well. In terms of actual performance and criteria, they’re more like clergy. There are various performative religious traditions and ceremonies that have to be serviced and abided if one is to have any hope of them bestowing their blessings.

earnesti 2y ago
The deck from March says that they have been sending the deck around since March, and are still looking for investments. It might be meaningful, but would have to measure how quickly the typical funding rounds are made for successful companies, to have an "academic" argument about it. However it doesn't really matter, a VC can invest for whatever reasons he wants.
- shawabawa3 2y ago
  Also the fact they haven't updated their deck in April/May means they didn't have any huge growth in march/april/may to brag about, or even they had bad march/april/may results that they want to hide
  - throwaway42668 2y ago
    Whatever the reason. The VC objection is nonsense of the fortune cookie wisdom variety. We (venture backed founders) tolerate it because we need the inane spiritual blessings of these dubious kingmakers to make our world go around. So we smile, nod, grit our teeth, and move on to the next one. But none of them are secret geniuses with a unique skill to predict the future based on random made up nonsensical “signals”. They’re herd animals where survivorship bias has a reinforcing function until a point where being luckiest longest makes it possible to put a finger on the scale of outcomes to make raising subsequent funds easier, makes it possible to set the trend the herd follows, and makes it possible to somewhat curate outcomes (“soft landings” instead of insolvency) for your portfolio. Every single unicorn and/or significantly exited startup has a pile of VC rejections that’s miles high. The trick as the founder is to just figure out how to find better aligned investors. Typically ones who aren’t high on the ego trip of being an accidental kingmaker. Take the “feedback” like that of the VC in the post for what it is… complete nonsense from someone who’s accidentally successful enough to get away with such a silly criteria because nobody wants to insult the cult clergy to their face in case you might need their blessings at some point yourself… and move on. Successfully raising money is first an exercise in qualifying who the right investors/funds are for what you’re doing as a venture and second it’s an exercise in number of shots on goal you can make in as short a period as possible until you find one, “Yes”. Full stop.

caseyy 2y ago

Most business founders don’t need VC money and are worse off for taking VC money. I find the mindset “my pitch deck was 2 months old so I didn’t get funding” very out of touch of business realities. It is far more likely that that type of business doesn’t need VC funding. Your SaaS can probably be built with your daytime developer salary. No VC ever says “wow, what a great investment opportunity, one of the best, but the slides were old”. You don’t even need the slides, or the rehearsed elevator pitch. Just build a business that’s worth VC money (solid, profitable, and ready to scale up) if you absolutely insist on it.

__loam 2y ago
Profitability is optional.
- caseyy 2y ago
  Profitable companies attract much more VC interest and even competition.
  - tomnipotent 2y ago
    Doesn't a VC make money from valuation, not profitability. A profitable business has either reached market potential, or isn't spending enough on growth. Anecdotally I can think of many more examples of unprofitable businesses getting VC money.
    - stanleydrew 2y ago
      > A profitable business has either reached market potential, or isn't spending enough on growth. Yes, but spending money on growth is probably the number one thing VCs like to invest in. If you happen to be profitable, but also can demonstrate a clear path to growth, then VCs will lean in.
    - devoutsalsa 2y ago
      Not counting their 2% annual maintenance fee, a VC makes money from buying shares low, selling them high, and keeping 20% of the high price minus the low price. So yes, they make money if the valuation is higher than the when they bought it. Example: - buy 1 million shares at $1. - sell 1 million shares for $101. - (101 - 1) * 1_000_000 = 100_000_000 - 100_000_000 * 0.2 = VC gain of 20_000_000

keiferski 2y ago

The way VCs filter out potential investments seems fairly similar to the way Ivy League schools filter out potential students. (Probably because they are comprised of the same people.) It is not really about technical brilliance, or innovation, or anything that is written on their website as a core value. It's more about whether you're smart enough and can follow instructions and fit into the overarching institutional structure of school and work. For companies that are at the point of raising venture capital, this might be what is actually needed. But it certainly seems like it filters out a lot of the more idiosyncratic, brilliant types that aren't concerned with (from their perspective, irrelevant) details, like the date on a pitch deck. It seems like a good way to get institutional operators, not rare but not-quite-conformist innovators. I can't imagine someone like Steve Jobs or Nikola Tesla passing these VC/Ivy League kinds of tests.

smabie 2y ago
If you're brilliant and idiosyncratic and delivering something truly compelling, then vcs are more than happy to look past these things. God knows how many very eccentric founders have received funding
- max_ 2y ago
  It is impossible for something in very early stages, that needs money to be "truly compelling". For VCs a compelling product means great traction but to get great traction you need initial funding so it's always a catch 22.
  - MichaelZuo 2y ago
    Not if they are a bonafide super genius, then it's entirely possible. That's the minimum bar without traction however. A regular genius isn't that impressive.
    - kabouseng 2y ago
      VC's don't have the ability to distinguish between genius and super genius...

jrflowers 2y ago

I love this blog post about why Jason Lemkin’s post about passing on a pitch because the pitch deck said March instead of May is a good and normal post. Without this informative content we would not know that Jason Lemkin‘s post was not at all off putting or ridiculous, and we are rightfully brought up to speed on how cool it was, in fact.

input_sh 2y ago
Also, "caused an outrage" apparently means "barely got any traction". <200 likes, barely any retweets, even the 30 or so replies weren't as confrontational as I was lead to believe by that intro. I guess "VC was wrong and nobody really gave a shit" doesn't have the same ring to it.
- jrflowers 2y ago
  >I guess "VC was wrong and nobody really gave a shit" doesn't have the same ring to it. This is a good point. When something looks like Jason Lemkin posting something ridiculous on social media, it is actually an opportunity for us to learn of both his fame and the normalcy of his opinions, as well as to be reminded of the high portion of VCs that are good human beings.
- wasteduniverse 2y ago
  [dead]

anonzzzies 2y ago

We had a vc that was my friend; not anymore; we failed and he felt betrayed we ‘gave up so easily’ (we didn’t). I guess a better one is; VCs should not be your friends.

LAC-Tech 2y ago

"The logos good, fine." LOL

morgunkorn 2y ago

VC stands for Vampire Capitalist, right?

braza 2y ago

For folks that are working on a product right now, given the incentive structures behind venture capital, are there genuine reasons to pursue that kind of money? Let me rephrase: How many folks out there are searching for for some kind of niche business with enough to cover expenses and had some profit in a small scale? I had a short experience with the music industry and the whole enterprise + VC sounds the same dynamic between artists and record labels back in the day, where was not enough to play in local bars and have a steady presence there, but everyone wanna to be Metallica or Anthrax.

robertlagrant 2y ago
Any business that needs up front capital needs to get it somehow. E.g. develop a medical device that has years of development, testing, and regulatory lead time. Who pays the salaries and for the laboratories and studies? It's either: only allow companies that are already big to do new things, which they often aren't geared for in various ways, or have a mechanism to allow capital into new businesses from outside, that comes with certain expectations. You're free to decline both the capital and the expectations, of course, because this is a free agreement made between two parties.
earnesti 2y ago
If you have a business that can get off the ground without funding, great. That just isn't reality for most. There is maybe some people who raise money "because it is cool", but I would think it is in the minority. If you have a business that is profitable, you are happy with the growth, etc, there is little sense in going to the investors begging for money. The couple bootstrapped businesses I have seen didn't have much interest in raisin.
- borgdefense 2y ago
  [flagged]
indigochill 2y ago
I've never heard of a musical group or artist who can make a sustainable living on just a local scene (although maybe that's rather the point, since they stayed local to wherever they are). Even for huge artists, from what I've heard merch is where the money is, not ticket or record sales (or today, streaming, which is _ludicrously_ tilted against the artist actually making any money). Admittedly I last looked into this around twenty years ago and my sample is tilted more towards the folk singer-songwriter type rather than, say, DJs. That's not to diss local artists, though. Some are incredibly talented, and I loved the scene I was in it. Just, if we're talking about investing, making music looked like 9 times out of 10 a money sink you do for the love of it, not an investment opportunity.

factorialboy 2y ago

Do VCs need regulation? Should we ensure equity for diverse founders?

earnesti 2y ago
Yeah, why just VC's, force everyone to invest. There is a lot of rich ppl in the world who don't invest to startups at all. That is wrong. We should have a law that requires at least certain % of net worth to be invested in startups.

claudex 2y ago

> VCs aren't your teachers nor your managers. They don't have an obligation to provide feedback or even to reply to your emails. They won't give you a second chance. They won't coach you so you can do better next time. Seems like the typical teacher or manager to me.

siva7 2y ago
Spot on.

yard2010 2y ago

I don't know if this person realizes that he basically asks people to lie in the future and make a custom deck with custom dates and custom jokes to each angel. It's just a part of a bigger short sighted system tho, hate the game not the player

zandrew 2y ago

One of the things I'm surprised isn't covered more is the liquidation preference that VCs take... an investment is basically an extremely expensive loan. If shit hits the fan, they are entitled to the payout of up to their original investment, so all of the company's assets, when liquidated, fund those proceeds. If your company succeeds, the VC owns a percentage of your success.

earnesti 2y ago
The reason for that is that there is very high likelihood that the "loan" will never be paid back. It is just a market. As far as I understand from the statistics, VC's are not making great money, on average. Average startup gets the funding, uses it for salaries and everything else, and never pays the investor any substantial amount back.
csomar 2y ago
The interest rate on the loan, is your ROI. This is reasonable because it's a very risky loan. > If shit hits the fan, they are entitled to the payout of up to their original investment, so all of the company's assets, when liquidated, fund those proceeds. I thought all loans are structured that way? I am not sure why this should not be the case here.

xyst 2y ago

If there’s one thing ChatGPT could replace: developing “pitch decks” and “cold emails” for vulture capitalists. Train LLMs using this site and reap that (dangerous) VC money.

bjornsing 2y ago

If there’s anything to be irritated about here it’s that yet another VC revealed how absolutely moronic their job is. Any idiot can look at some slides and see if the numbers are good. The hard part is finding the gems in those bottom 90%. Sadly nobody seems to be doing that.

andy_ppp 2y ago

VC really is the A&R of our time.

selimthegrim 2y ago
I guess that’s what they meant by “tech is the new music”

RACEWAR 2y ago

I may be betraying a certain level of cultural literacy for the bulk HN demographic but the original tweet reminds me of when popular online vixens (e.g., Instagram models) talk about “who slid into their DMs”.

avereveard 2y ago

more genreally, two companies cannot be friends

leashless 2y ago

Remember: if VCs believed in what they were doing they would not take a 2% annual management fee and 20% of the upside. They’d take 40% of the upside and live on ramen noodles. VCs make money by raising money from LPs. They spend this money on investments which don’t look too bad if they fail, because nearly all of them fail. Looking good while losing all of your investors money on companies which go broke is the key VC skill. Once in a while you get a huge hit. That’s a lottery win, there is no formula for finding that hit. Broad bets helps but that’s about it. The “VC thesis” is a fundraising tool, a pitch instrument, it makes no measurable difference to success. It’s a shtick. Sympathy, however, for the VC: car dealership sized transactions paired with the diligence burdens of real finance. It’s a terrible job. Once you understand that VC is one of the worst jobs in finance and they don’t believe most of their own story — it’s fundraising flimflam for their LPs - it’s a lot easier to negotiate. 1) we are a sound bet not to get you in trouble if we fail (good schools and track records) 2) we will work hard on things which your LPs and their lawyers understand, leaving evidence of a good effort on failure 3) we know how the game works and will play by the unwritten rules: keep up appearances The kind of lunatics who actually stand to make money with a higher probability than average - the “Think Different” category - usually violate all of these rules. 1) they have no track record 2) they work on esoteric nonsense 3) they look weird in public And they’re structurally uninvestable. Once you get this it’s all a lot easier: the job of a VC is not to invest in winners, that’s a bonus. The job of a VC is to look respectable while losing other people’s money at the roulette wheel, and taking a margin for doing so. I hope that helps.

tomp 2y ago
This doesn't make sense. I worked in hedge funds, even there the management fee (2%) covers the fixed costs (legal, trading operations, treasury, IT operations, etc.) whereas the performance fee (20%) incentivises the alpha. In VC it's even worse, because at least hedge funds are liquid. VC investments don't realize their value for 5-10 years! Are they supposed to work for free for 10 years? Even the support staff?
- leashless 2y ago
  Take 40% and raise capital for the VC operations as a separate transaction than from the LPs, of course. Efficient markets.

bigbacaloa 2y ago

[dead]

techterrier 2y ago

If startups are a casino, VC's are Tony Soprano, offering you another 100k after you've already lost everything you have. Smiling away, tell you it'll all be fine.

jojobas 2y ago

Nobody is your friend by default. Not bosses, not employees, not colleagues, not vendors, not customers. It's dumbfounding that adults need to be reminded that.

barrenko 2y ago
Not your spouse*

kreck 2y ago

Just an anecdote (no judgement here; VC has its place): An acquaintance of mine who works for a VC firm once said "Ultimately, VC money is a loan for people who are not bankable". That really resonated with me as with that perspective I understood why behavior & practices are closer to what you'd experience if you personally need to take out a loan outside of the regulated banking system

saberience 2y ago
The whole "hate VCs" thing is kind of silly in my opinion. VC wouldn't exist if founders didn't want and need capital and have no other way of getting it. Also, for every other "evil VC" story, there are other stories where founders are really happy with their VC board members, have a strong and positive relationship with their VC partners, and end up getting some kind of positive exit which wouldn't have happened at all without the investment. Sure, some VC companies may be shitty, some others may be amazing, but this is basically like everything in life. Some schools are shitty, some cops are shitty, some cars, tech companies, managers etc, are shitty. But some of all these things can also be great and awesome too. Thats life.
- kreck 2y ago
  I generally agree. Maybe to add to your argument: A - Just as with customer reviews on amazon unhappy customers are often times the majority to leave a review whereas fewer happy customers voice their opinion in the form of a review. I suspect the same goes for VC interactions. B - Due to the way the VC business is structured the variance in "quality" of VCs is heavily skewed and not normally distributed, tricking our perception of what to expect. In other words i suspect that you have a much higher likelihood in to interact with a very "low quality" VC or absolute "top VC" than with an "average" VC. If you amplify this with A you may get an even worse public opinion. Nevertheless I think on an individual basis you're always better off if you don't need VC for your business - if you have that option.
- cageface 2y ago
  VC wouldn't exist if founders didn't want and need capital and have no other way of getting it. This is too reductive. A lot of founders have to raise because they're competing with other companies with VC funding, often dumping their product on the market at a loss to starve out bootstrapped competitors and lock in customers.

RileyJames 2y ago

> A VC receives 10 to 50 decks per week. Out of those, 10% are hot: think OpenAI. lol.

csomar 2y ago
The 0% interest era did wonders for this economy.

TrackerFF 2y ago

Some people will give a shit, some won't. I've met VCs that would scoff at Jason for trivial stuff like that, while I've met others that would agree with him - and maybe be even rigid about "small stuff". My experience is that if the VC is someone who has background from finance, consulting, or law, then they are more likely to lose their minds over superficial stuff like logo placement, font consistency, alignment of images / tables / etc., and of course consistency in dates etc. - probably because that's all they did during their formative years in their respective industries. Second point: There's a bunch of VCs out there with the only qualification of A) Having founded / led a successful startup B) Having invested in startups during the ZIRP-era So while you have some tremendously good VCs that have stood the test of time, and have "seen it all", there are also VCs that will be washed away the next few years. So don't take it personally if / when some VC will decline you and and be all preachy about it. Last point: Some of these stories are just made-up BS to generate content and thoughts. Half of the stuff VCs write on LinkedIn or Twitter seems to be fiction, for the sake of getting a point through to their listeners. Also keep that in mind.

Kalanos 2y ago

VCs make steep graphs steeper. By the time you are in a position to raise money for acceleration, you don't really need it. All capital, no venture.

cajunboi34213 2y ago

In my experience founders that have raised vc regard them as bankers. Founders who haven't successfully raised (for whatever reason) and people that dream about being founders postulate on these things. Funding is simple. Seed or before you/team are fundable, based on some signal of you've done it or can do it. Post seed, it's not you, it's the business. If in 2 months you haven't gotten interest or intros, you're business is not VC fundable, or you suck at fundraising which means you're probably not the right venture backable CEO.

drdrek 2y ago
Bankers with good PR. But for the first time founders out there please don't sweat it if you can't get funded for a long time, you may just be early. I gave up on a great idea (that my partner later worked into a great product within an existing company) because we were unable to get funded for 3 months. And later got VC funded after working on a worse idea for a year. It can take time, It may require you to get customers first, but if you get along with your partners and can see business progression don't worry to much about VCs, they are mostly capricious up until the point you can show that its a good business. Then they are, as OP said, just bankers.
- cajunboi34213 2y ago
  first time founders that have large followings in the community they are building for are the most fundable. Reason being, your first product or iteration will fail, but if you have a captive audience willing to try and give you feedback you're in the best position to achieve product market fit.
  - drdrek 2y ago
    My career is focused on B2B so I don't know a lot about communities, but the sentiment is the same. You have an edge if you know a lot about a subject and have good connections with professionals in the field that are willing to talk to you. But I would say VCs usually prefer a team as its more likely to check all the boxes. I've heard 3 as the "optimum" for team resilience vs founding team social complexity, but that is just a general sentiment. If you have a community get a tech guy, if you are a techy get a product guy, if you are a product guy get a sales guy, etc. Don't try to be an ubermensch, just find a team you can work with.

leashless 2y ago

Let me throw in one other tip for founders looking to get funded: do not ignore regional VCs. Most of the stories about "how VC works" are 10, 15 years out of date. The cultural "sense of things" lags behind the reality. We found this out the hard way. In fact, contrary to all expectations and myths, VCs (outside perhaps of the top 50 or 100 firms?) read their emails and take cold meetings. They have to. Every region in the world has some clone of Silicon Valley - technical universities and accelerators and incubators and funds - and most of them have very little deal flow or exposure to outside opportunities and ideas. The guy from a second tier French city part-funded by an Economic Development Agency has as much luck getting into a deal with Union Square as you do. But he still has money to invest. So most of the VCs outside of a small, narrow set do answer emails, are glad to be approached, and are basically glad to see you if you've got anything at all which is interesting to say. It doesn't cost much to try, either. It's the price of an email. Yes, warm intros to top tier VCs are really handy. But that's also why the top tier VCs are so massively subject to group think and wind up collectively dropping five billion dollars on electric scooters and stuff like that. Everybody is human. Everybody is here to do the deal. At the top of the chrome towers are men and women in shoes and socks trying to look good to their management. Nothing behind the curtain, no wizard of oz. Do what you can. Don't break yourself for the myths. Do intelligently bet the odds! Tech is going to be the dominant story in human history for the rest of our lives in almost all scenarios. It's not a bad industry to be in. It's just the financial side of that industry is really heavy on the mythology and maybe that's holding us back now.

petesergeant 2y ago
I feel like my entire takeaway from a business-y degree at a rather good university kinda boiled down to “don’t go to European VCs, they’re mean and valuations are bad, while providing no upside”. Will be raising on an idea that makes me look at least a little bit like a lunatic in four weeks’ time, so keen to see how this is born out!

frank_bb 2y ago

[dead]

j7ake 2y ago

Don’t do business with people who think putting the wrong date matters.

openrisk 2y ago

In transactional financial markets "friends" is not the right word, but there is something to be said about more or less effective alignment of interests and that is purely a matter of design. There is more than enough money sloshing around, it all boils down to designing contracts and suitable information exchanges between parties. So anybody thinking that the current system is sub-obtimal can try their hand at disrupting the VC system and making history :-) An arrangement that better utilizes the majority of the entrepreneurial crowd's energy and time is likely to at least carve a niche, if not dominate. It may not even be that hard. The chasing of planet-scale returns (with the corresponding discounting of the rest 99.99%) is a recent phenomenon and may be just an aberration.

benreesman 2y ago
Financial accountants have a line item for not being a dick. It’s called “goodwill”. No shit.
- bombcar 2y ago
  Goodwill is like dark matter; they have to account for value increases or decreases when doing double entry bookkeeping so they invented goodwill for that.
  - benreesman 2y ago
    The trivial necessity of valuing the intangible of being well-liked by one’s customers and partners has nothing to do with positing definitionally unobservable mass. The cost and effort and intellectual integrity burnt on linking that mass to bosonic super partners even after a six sigma result at CERN on scalar field excitation at 125 GeV was found exactly as everyone knew it would be without a squark in sight is very on brand for what passes as rigor around here these days.
- gumby 2y ago
  Ha ha, this is both hilarious and so true!
2y ago

imglorp 2y ago

> the OpenVC pitch deck tutorial explicitly says to never include the date on your cover. Careful, there's often metadata in a deck, if you know how to look.

tlogan 2y ago

VCs primarily provide capital, and that's their essential role. They aren't there to be your friends or mentors. Remember, if you mix friendships with financial asks, you risk losing those friends. So, VCs are a great resource for funding, perfectly suited for what they're designed to do!

mepiethree 2y ago
Some of them do like to pretend to be your friend after they’ve invested, though. Don’t fall for it :)

uptownJimmy 2y ago

I remain confused as to why anyone would take VCs seriously at all, much less want to be friends with them. They mostly give strong vibes of "sociopath" and "malignant narcissist".

airstrike 2y ago

Pro-tip: when I was in M&A, I would always write the season rather than the month on the cover of materials sent to prospective buyers. "Spring 2024" sidesteps the issue entirely and the deck even survives being forwarded around for a few months.

curious_cat_163 2y ago

I wonder if any generalization as an attribute for all VCs is ever going to be a good enough. People call them “not friends” or “sheep” or whatever. But it has always felt like an unsatisfactory framing. It is a marketplace. The equity of companies is for sale and VCs are buyers. The buyers come with a variety of risk appetite, $ available to invest, personal histories and they all want very high ROI to justify staying in the business. Companies also have their own variety in ambition (TAM), track record (growth rates) and level of conviction of people who work there.

gwbas1c 2y ago

The tone of the post just reminds me of how frustrating interviewing for a (software engineering) job is: Many rejections are arbitrary and the best advice is to just keep applying. In this case, I suspect Jason assumes that every business should be 110% focused on fundraising. Well, businesses are trying to run their business! The goal is to run the business, the pitch is a tool, not the goal. The same thing applies to finding a (software engineering) job: Candidates have life obligations and can't dedicate 110% of their time to pleasing a single interviewer. The goal is to demonstrate that you can do a job, the interview isn't the job itself.

Gordon1188 2y ago

[flagged]

hackernoteng 2y ago

They might not be my friends, but they did pay 90% of my salary for the past 22 years...

onhacker 2y ago
When a VC wants to bankrupt it's competitor it's bad and most of them do the same

DrScientist 2y ago

Carnivorous sheep - is my favourite unflattering description of VC's. Ironically this I heard this from somebody who ultimately became one. Perhaps it's Zombie Carnivorous Sheep.

wslh 2y ago

> think of a VC as a sales prospect I think the problem with VCs is that, most generally, they are not good sales prospects, they are pedantic. A good sales prospect is someone who give you feedback, even automated, so you know where you are. Even if they receive a zillion of pitch decks every day (as it is noted in the article), they should have a better process in 2024 to handle that. I will give you an example as a customer which can be translated: I sent a simple problem to HubSpot and after many chats and email tickets they couldn't solve it! They are advertised as a top CRM, we are happy as customers but I feel there is nobody in the line. On the other hand we are customers of Bizneo for HR/PX and they are happy to make a call and help us. I would expect more feedback from VCs, they are more terrible than banks giving feedback, knowing that they are in a power position but that will not work for long time.

j45 2y ago

Not all VCs have the same investment thesis. Alignment and mutual fit is important. Being undiscovered and being found by a process is partially a positioning piece too. VCs want a transaction in a short number of years depending how far they are into their current fund. It’s not always about any one idea, but rather what idea can be the winner to make up for the others that didn’t win big. Also, knowing the difference between investors and VCs is important - investors tend to often give more personalized support than VCs. If you’re ready to go big and be supported to do so, VCs can be just what’s needed. Increasingly, VCs are a feeder system to private equity and you may be able to position yourself for that long term.

d_burfoot 2y ago

This is probably a good reminder. But you could write an article like this about every institution: - The police aren't your friends - Your employer isn't your friend - Your colleagues aren't your friends - The government isn't your friend - Small businesses aren't your friends - Big corporations aren't your friends - Elon Musk isn't your friend - Your landlord isn't your friend - Your professors aren't your friends There's no such thing as a relationship where the interests of both parties are perfectly aligned. And the pain caused by any misalignment will be more intense when the stakes are higher, such as startups/VC.

jkaplowitz 2y ago
The article is useful because, while most of your other examples don’t pretend to be your friends, VCs often do, at least at a superficial level. Understanding that this seeming friendship isn’t real is important. VCs do have a helpful role to play in funding many types of startups, but the role of investor is very different from the role of friend.

iamleppert 2y ago

What is more striking is that this VC felt it necessary to take to LinkedIn to "educate" others on his reasoning. For what purpose? So that people will remove dates from their slide decks now? Because that is the likely outcome. The only investors who have enough time for such things generally aren't the ones closing the best deals. What does it say about him that he is desperate enough for a deal that he has to open cold emails and then take to LinkedIn to criticize a date that is two months old? If you notice he didn't say anything about the content of the actual information being outdated. Just the date. His biggest gift to this company was not investing in them.

nextworddev 2y ago
He felt "triggered" that he wasn't the first call, which comes off as petty and entitled, which most VCs are.

toss1 2y ago

As the VC pointed out, the key here is the two-months-old date. But not exactly for the reason he stated. It is not that he isn't the first, so he's got thin skin or wants only founders who thought he was the best/first VC to approach (and smart founders might not take their first shot with their most favored VC as they'd want to hone their pitch with less-critical candidate VCs). The reasoning here is more likely that "other smart money has looked at this deal and passed", so he can leverage the efforts of these other unseen VCs who passed. This could be written off as lazy/cowardly 'herd mentality', but it is a real signal. It's also true that by definition, if there's a unique opportunity here, he's also missing it by grouping himself with the other VCs. But that is a negative-space signal, and the question is whether it's more likely determinative than the signal that "yeah, they also passed".

mandeepj 2y ago

> VCs aren’t your friends Congrats, good for you! You learned something new or probably forget something that you taught yourself.

chewbacha 2y ago

Moral of the story: Don't date your slides.

tptacek 2y ago

This is weird, because my understanding and experience of fundraising is that serious prospective investors never get deals from cold inbound slides; they've been introduced, and, most likely, have been talking to the company for months prior to a "formal" start to fundraising, in "no, no, we're not raising money yet, just looking for advice" mode, waiting along with 5-10 other investors for someone to preempt. This is like a whole mythology constructed around the idea that instead of networking and preparing, you apply to VCs as you would to a college. Does that ever work? I'm seriously asking. (YC doesn't count!)

enra 2y ago
As long as I been around startups, about 15 years, the advice always have been had more success getting warm intro. Even more back in the day than now. I think PGs essays lays out the fundraising process this way too. The advice is never just send deck to a VC. Same as just applying to a company. Private organizations have no need for any kind controlled process, you're always better having or building of personal relationships and convincing people directly first. It's often even about the pitch or pitching skills. It's more like relationship or case you build, then the pitching is just formal step to close the deal. I think the cold approach only works start the relationship if you have proven business, great potential and can tell that story well. But also by then VCs might already know about you and come to you. Otherwise it's always about building some level of personal connection first. Essentially you're asking to someone personally believe and bet their internal and external reputation on. They are not going to hand you the money after one hasty email and deck. The anti-VC crowd often try paint this as some kind of exclusive country club, but it's not true. So many new founders raise capital all the time. VCs are always looking for new founders and companies. But it's also true that if you just crawl out of the woods one day and go meet a VC and ask them for $2M is likely not going to happen. If you don't get a single person in the world with some kind of VC connection to make a warm introduction to you, it often considered as a filter that you're not serious enough about your business.

mateus1 2y ago

This is the George Costanza approach to VC: you go looking for some minor flaw, make a big deal out of it and then boast/complain to your friends. I know humans aren’t rational creatures but boasting how you make big investment decisions on a glorified pseudoscience call like you’re Sherlock Holmes is icky.

_yb2s 2y ago

I learned that VCs aren't my friends the hard way... they stole my company from me and left me with nothing. I discovered a promising new medical treatment- a small molecule drug with impressive experimental results. My name is on the patent and my co-inventors decided to form a startup and gave me co-ownership/stock, although I did some work to help get the company started I didn't want to leave my current job to be involved in full time running the startup at the level they were. They got big VC funding and the VCs reformed the startup as a new company. During the pandemic lockdown, trying to work at home while parenting a toddler with no childcare, I was sent a form to sign by a new VC firm funding the company, and I was so stressed with the pandemic situation that I just trusted them and signed it without reading it. The VCs cut me out entirely... just deleted my shares and ownership of a company based on tech I invented and patented. I can't revoke the patent rights either, because they already had a contract licensing it from my employer.

zrn900 2y ago
Can you expose the names and/or the company name of those s**stains?
- _yb2s 2y ago
  I've spread the story around the biotech startup community in person, but can't share it here without de-anonymizing my HN account, which I would rather not do.
  - zrn900 2y ago
    You can use throwaway accounts.

dontupvoteme 2y ago

>Jason (star emoji) (uk flag emoji) SaaStr LDN June 4-5 (star emoji) Lemkin This person is famous? sounds like he's mad about being sloppy seconds `:)`

light_triad 2y ago

As one commenter mentioned it comes down to having suitable information exchange between the parties. Some VC said no to most big successes in SV at some point. I recommend watching a pitch competition with lesser known VCs and companies like Pitchforce. You realize how difficult it is to understand what people are building and why it could be big. Most VCs will not be users of the product or experts in the vertical and will use other signals, however imperfect or limited as is the case here. https://pitch-force.com/ https://pitch-force.com/

mrangle 2y ago

If this looks attractive to a founder: ""We want to be the first check in." "We add value" 'We are responsible investors". "We're in for the long run". "We back outliers" and the oh-so-famous "Let me know how I can be helpful". then what they should look for is a skilled operational partner with a high-ish IQ and a stable personality, almost certainly with access to money that can be used for bootstrapping the business. You know, a virtually nonexistent unicorn in the circles that most people operate. Someone who is as rare as the right spouse. That combination is worth a hefty percentage. VC money isn't optimal for the initial startup phase. Everyone will be happier, detail nitpicking will be nonexistent, and the VC involvement will be more natural at the point in which customer acquisition rate and the cost of that volume is outpacing revenue, which should be the exponential growth curve often in years 5-10. Sometimes an acquisition comes soon after. If a founder cares about their business, then asking VC to essentially be their startup partner is asking for trouble in a lot of instances.

llmblockchain 2y ago

As much as I dislike VCs, I didn't find the Twitter post to be that bad. I can see his point about the company being an almost, and on top of that getting warning "signs". It wasn't the fact that the date was a few months old, it was the fact they didn't care enough to update it before sending the deck. It was the fact they did the bare minimum (or less than minimum). I never really put it in words before, but I pick up a lot of these signs. From the way someone writes, to the way they text message, to the content they consume, to how they handle social dynamics like grabbing coffee together or a lunch. It all paints a picture of a person and/or team. These things matter. If they can't take their time to update the deck, they probably skimp out elsewhere.

fmajid 2y ago

Two-time founder here. I think this naivety reflects more unrealistic founder expectations raised by the bubbly fundraising environment of the ZIRP (zero interest rate phenomenon) than any fundamental change in VC.