Following up after a VC meeting…

January 21, 2011

Some of my colleagues seem to be pretty good at following up with entrepreneurs and others are truly terrible.  I think/hope I fall in the middle ground – trying to do a good job, but not always making it.  I am not sure how the good one’s do it but I have a great deal of admiration for the gracious VCs that actually get back to everyone quickly.

Here’s the thing…I think most VCs really want to (1) say yes or no quickly,(2) provide some feedback, if it is requested, and (3) generally help entrepreneurs succeed.  Since this response cycle doesn’t always happen fast enough from the entrepreneur’s point of view, I suggest that the entrepreneur learn how to manage the process.

What if you don’t get a response (in a time frame that seems reasonable)?

If we like a deal, we will usually follow up but very few opportunities fall into the “we need to get a termsheet out on this right now” category (i.e., party like its 1999).  The truth is that timing to really engage in diligence can take a week or a month, it depends on what else we have cooking at the moment.  Our current portfolio companies get first dibs on our time, then deals that we are trying to close, then new deals.

Thought we usually will follow up (eventually), sometimes we actually leave the next step to the entrepreneur.  Maybe they have other funding options so we wait to see whether they really want to engage with us.

Regardless of VC excuses, as the entrepreneur, you still need to know whether to mentally “move on” or not.  I don’t think it is unreasonably for you to expect some feedback as to where things are going in a week or so.  I think that the entrepreneur should end an email a few days after a meeting and then again the following Monday afternoon.  I personally am not bothered by an entrepreneur dropping me emails until I give them an answer and I will try to give them a quick “working on it” response at minimum.  But don’t be offended if we don’t respond immediately.

Why might the VC be slow to respond and say yes or no?

Probably because the answer is not yes or no.  Maybe we are still thinking about the deal…or have a few calls out to gather information about the team or the .  Maybe our partners have been traveling and we haven’t had a partner meeting in a few weeks and want to wait and get their take.   Maybe we are working on too many new opportunities already and need one to drop out before getting to yours.

My personal bias is to try to think about how each opportunity can be great or fit the fund so sometimes I hang on too long before passing on the deal.  The result can be that the entrepreneurs that I like but with a deal that just doesn’t fit us (in terms of stage, geography, sector, size, etc.) get slow rolled on my response as I try to figure out an angle that makes it work.

The bottom line is that VCs rarely move fast enough for entrepreneurs (and I like that, entrepreneurs should be drivers), so don’t hesitate to reach out to the VC a couple of times over the 2-3 weeks after the meeting.

OK, you get a “we are going to pass”, what about feedback?

It is important to realize that this is not a beauty contest with an absolute scale and VCs are not the smartest guys in the room.  We may do a couple of deals a year and we probably have an idea about how they fit in our portfolio.  Your deal might work better next year than this year, and your company will have moved on by then.  Our goal is not to do every good deal, but to do only good deals.

My suggestion to entrepreneurs is to ask whether there is any feedback on the presentation and whether there were any major issues that made the deal more or less attractive.  A VC is not going to tell you that the personal chemistry is not right or that there is a problem with the team, but we may tell you if your market seems too crowded, or your likely deal structure presents a problem. If you get some feedback, don’t automatically assume it is a punch list that makes the deal a better fit for the VC but it never hurts to touch base later and let the VC know how things are going.  Every entrepreneur and every VC will have multiple chances to interact over the years so, at minimum, so I look at the feedback loop as a way to build relationships for future deals.

Recognize that VCs are, and should be, careful about certain feedback.  Entrepreneurs are emotionally invested and can take feedback personally.   Add in the fact that I am smart enough to know that my opinion is not necessarily fact – we can be wrong – lots of VCs passed on Google. Bottom line here: listen to feedback but realize that you may not be getting all of the reasons for passing.

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