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Why VCs Really Reject Startups
itwbennett writes "Instead of simply not following up with startup proposals that he doesn't intend to pursue, venture capitalist Josh Breinlinger decided to change things up and not only hear every pitch request but respond with honest feedback. For those on the receiving end of that honest feedback, Breinlinger's silence may have been golden. It turns out that Breinlinger, and perhaps most VCs, reject your proposals because you lack experience and leadership skills and your team is weak. Would you rather hear the hard truth about why your startup didn't get funded or some vague dismissal?"
You can't fix what you don't know.
The business climate in the US is: old, entrenched businesses fight other old, entrenched businesses in a race for the cheapest shit. New businesses either make no money or bring something to the table that will eventually be bought by the old business. VC money is better spent on patent trolls and companies they can sell for a quick profit.
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If the reason is lack of leadership skills/experience and a weak team. If they had those qualities, they might not need to go seeking a VC for help. On the other hand, sounds like a catch all for VC rejection.
Would you rather hear the hard truth about why your startup didn't get funded or some vague dismissal?
If you can't handle hearing the cold, hard truth then you are in the wrong line of business. Period.
Ideas are worthless. We have great ideas all the time (or at least, ideas we think are great). The value of a business proposal isn't in the idea, it's in the execution of the idea.
The most important things to a serious VC when it comes to a startup have almost nothing to do with the idea itself. You don't have to convince them of the idea: they've probably heard it before already. You're trying to convince them that YOU are the one to EXECUTE that idea, and that you can do it better than anyone else. If you can't, then the'll fund that other person instead.
When you approach a VC, the only thing you bring to the table is your ability to execute the plan you've proposed.
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If you want a strong experienced team with great leadership, then you aren't a venture capitalist. You're an investor.
Three days from now?? Thats tomorrow!! ~Peter Griffin
In the 90's people were getting funded to build a website and a forum
Today it's the same thing except its called social media. Seems like every other idea I read about is a Facebook/pinterest/instagram clone
Unless you have a cool idea that solves some kind of problem like square or one of the other payment startups go back and think up of something new
Slashdot loves making fun of management, marketers, financial people, MBAs, and pretty much every business unit that is not R&D and engineering, but these people are essential to making a business successful. Startups are generally comprised entirely of engineer types who may have amazing technical know-how, but they don't know how to sell their product, they don't know how to manage money, they don't know how how to manage a company and personnel, and they don't have any business experience.
Anyone whose ever managed a business will tell you it takes much more than a good idea to make a business successful: it's 10% idea, 90% execution. Thus, if you go to a VC with nothing but a good idea, you're falling 90% short.
VCs are looking for something they can hype to the stratosphere and then sell through brokers on a percentage who need plausible deniability to protect their asses when the shit hits the fan.
This is the nature of Ponzi land.
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I really appreciated his feedback on my recent venture idea pitched to them: Step 1: Gather underpants ...
Step 2:
Step 3: Profit!
Apparently I need to figure out step 2...
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If I don't know what's wrong, I can't fix it. A vague dismissal doesn't help me improve things. And I'd posit that it doesn't help the VC either. VCs don't themselves come up with startup ideas, or they'd be doing that startup instead of looking for startups to fund. Where do they think the startups they can fund will come from? The more marginal ones take the feedback and use it to improve their plan, the more good opportunities the VCs will have to choose from.
My only experience is running a small town convenient store.
I've long been under the impression that someone needs to take the Moneyball approach to venture capitalists, because what they seem to sell as a model they are looking for doesn't jive with the success stories that I'm familiar with (e.g. Wal-Mart, HP, Apple, Microsoft, etc.).
I once took an excursion to Reddit, and later HN. Unlimited up/down voting sucks when dealing with a hive-mind.
1) If your universal lossless compression doesn't actually work, we want no part of it; if it does work, you already have enough funding in your personal checking account to succeed beyond your wildest dreams. What would you do if someone showed up asking you to invest in a 50lb bar of 28 carat gold? It's either fake, or the person bearing it is too stupid to live.
2) Your idea is great, but you simply showed up at the wrong address, not having done your basic due diligence to determine that we're too all dumb around here to recognize brilliance even if it bites us in the ass. If you also invent the cure for stupidity, come around again and give us another shot.
You may not believe this, but Steve Jobs's wasn't the first or even the second CEO of apple computer.
In fact, the man behind the initial venture capital foray of Apple was Mike Markkula (who served as the CEO). He was an initial angel investor who was referred to Mr Jobs by a few other VCs. Mike provided the "adult" supervision to Jobs and Wozniak during the fund raising part of company's existance. Initally, Mike hired Michael Scott (from either national semiconductor or fairchild, I forgot which one) as the first CEO. It was only later after some turmoil that Mike took over the CEO position and then yielded the CEO position to Jobs (and later supported Sculley which led to Jobs' departure, and then helped lure Jobs back).
So even Mr Job's didn't just walk into VC offices and get funded as the CEO of the company. But, Jobs was smart enough and passionate enough about doing the work that was able to put his ego enough in check to know that in order to get the money they needed to get it done. I believe that the Google story is very similar with Eric Schmidt performing the "adult" supervison...
DISAGREE! If you need to be told what's wrong, you were already a loser before.
While it is wise to look at your own plan and identify weaknesses, it is arrogant to assume that you can see all potential flaws and miss-steps. Also, why does there have to be something wrong for a VC to turn down an offer? Perhaps he/she has outside factors influencing the decision.
HA! I just wasted some of your bandwidth with a frivolous sig!