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Because they collude.

• btilly 13y ago
  My guess as to the dynamic is this. If a VC knows that SOME other VC is interested in you, they can't feel out other VCs to see who it is because it might get a third VC involved. But if one VC knows who the other VC is, then collusion is simple and clearly in the VC's best interest.
  • crapshoot101 13y ago
    No, again it isn't. If you are looking to raise $1M on a $3M pre and you're talking to two firms seriously with the idea of picking one investor (who would end up with 25% in that scenario), you might negotiate some of that point, but its pretty unlikely you will end up taking 1 on 1 ( with the investors each putting in $500K, which would get them to that same 25% ownership threshold as in the original scenario).
• crapshoot101 13y ago
  they really don't. I realize this is one of those conversations entreprenuers think VC's have a lot, but most VC's have ownership and $ thresholds they are aiming for in an investment - just splitting the baby in half with another VC firm doesn't get you there, and you'd be surprised at how many firms like working with firm a / b / c but hate d / e / f. The better argument for not revealing this is that its leverage - ie, the investor might think your other option is AH/Sequoia/Accel/Benchmark/Khosla/some other top-tier firm, while in reality it might be some relatively podunk firm - you get some potential benefit from that (and also potentially some downside if its the other way around). The compromise position here is being honest but guarded - ie, especially if you are talking to one of those above - As a founder / CEO's, come back to the investor here and say we're talking to a couple of top-tier firms, which gives the signal effect to the investor that they need to sell / convince quickly while maintaining your leverage as an entrepreneur.