If You Can’t Create Interest Move On

In my posts Create Momentum and Maintain Momentum I talk about how to increase VC interest and drive the process forward. However, sometimes these efforts don't work because a VC has insurmountable concerns about your business.  In these cases you need to gracefully move on.

Note that you may need to move on even if the VC has not formally said ‘No’. Ideally, VCs will let you know when they’re not interested. However, if there is no momentum and conversations die out over time, then you should read the ‘writing on the wall’ and move on.

To emphasize – when you move on be graceful about it. When I say ‘graceful’ I mean two things: be polite in accepting their decision (stated or implied) and don’t harass them if you disagree. There are two major reasons to take this approach.

The first reason is simply because it's the considerate and good thing to do.  Put yourself in a VC's shoes for a minute. As part of the job a VC must reject hundreds of entrepreneurs each year. They don't take pleasure in this and they're not doing it to 'get you'. They pass on business ideas because it is their fiduciary responsibility to allocate capital to the opportunities 1) that are consistent with the investment strategy that they described to their investors and 2) that they expect to generate the best returns. As a result, you should be considerate and respectful of their situation.

That said, VCs understand that entrepreneurs are ambitious and have an obligation to their investors and teams to do their best to raise venture capital. As a result, we know that some of you will pushback after receiving a ‘no’. Following up politely is fine. However, just remember not to push so hard that you offend VCs.

The second reason to be graceful is that you need to protect your reputation as an entrepreneur. The venture community is very small. Being a jerk to one VC may affect your prospects with others. Furthermore, for most entrepreneurs starting companies is part of their DNA; they will raise capital more than once. A smart entrepreneur has enough foresight to know that his reputation with VCs will be important to his career, not just to his current project.

One of my mentors always said that the pain in the venture process comes from the difficulty in matching investors and entrepreneurs. No two investors are the same and, as a result, most investors will not be interested in a single deal. It’s not personal; it’s just the way the market is designed. As a result, assume that most VCs will not be interested, avoid getting frustrated and be polite. That will position you to come back to VCs on your next venture.

This column was provided by Mark Davis. Mark is the author of Get Venture, a column designed to help entrepreneurs raise venture capital. In addition to his column, Mark is active in the venture community as an entrepreneur, advisor and venture capitalist. He currently works at DFJ Gotham Ventures, a leading early-stage IT venture capital fund based in NYC. Mark earned his B.A. in Economics with a minor in History at Duke University and is pursuing his MBA at Columbia Business School, where he is the Early Stage President of the Private Equity and Venture Capital Club and the Founder of the Columbia Venture Community .