VCs have hard time saying no. I don't blame them. Burnham's Beat has a good post about the topic: "The Art of Saying No".
In advertising there is a golden rule that one should never use negative terms - they could stick. If there is a chance of getting a negative association the risk is not worth taking. The same applies for the VC world. Businesses are personal for the founders. One is not saying no to the business model but directly to the persons as well. Or at least that's how often it is taken.
There are plenty of ways not to say no but still deliver the same message. Often VCs are suggesting some improvements or more milestones to catch up before moving on. They want to see your demo / prototype, first customer reference, some revenue, complete team, another committed investor etc.
The art of raising funds is to read between the lines and understand when they are really interested but want more evidence and when is the case that they are not going to invest. Only by experience one can tell the difference.
Finally some words of comfort. A VC (don't mean Fred!) saying no (or meaning it) is not actually a big thing. There are plenty of reasons for the answer and often it does not even indicate anything about the case. Some of these reasons could be that:
- their fund is already invested (2/3 or so, the rest goes for follow-up rounds)
- they are not familiar with the business area / industry
- the management company is not able to get approval from their investment committee (change of focus, someone is pulling out etc.)
- your business does not fit to their current portfolio (breaks the balance, similar investments already in, current investment would look bad etc.)
- they are just too busy to evaluate the case!
No wonder why VCs are like politicians - it is not that simple.
It took me a long time to appreciate this but it is so true: it is better to say no to the next google, amazon or ebay than say yes to a turkey.
SkypeIn is at beta mode but it works already with Mac. How about a UK/USA/France telephone number for €30 a year? A quick survey to my close circle revealed that it should work well.
Business 2.0 has illustrated some potential new gadgets from Apple inspired by Apple's chief designer from 1989 to 1996.
Jeff Nolan opposes that VCs Are Jerks claimed by The Zeitgeist.
Teleo is the latest competitor to Skype. (via TJ's Weblog) Newsweek has abrief article about VOIP companies.
Fred explains how to get money quick and dirty either planner or ad hoc from the current invetors.
You might want to read this well prepared essay by Paul Graham. How to Start a Startup is another recent article by the author.
'Entrepreneurial Thought Leaders' is a seminar arranged by Stanford Business School. John Doerr gave a lecture that is available as streamed.
(Via TJ's Weblog.)
Red Herring has an interesting piece about Anti-Intel tech company Linear that stays fat in profit by anti-sexy analog business. Think different, be different and most of all avoid standards.
Fred had a great post why not to take VC money. 99% of startups do not need it. Exactly my point (and post). Here's the direct link for Fred's ppt.
Alarm:clock is a great weblog that covers start-ups and VC deals. It is run by ex Red Herring old timers.
Fred reveals this week's VC cliche of
world class CEOs. The beauty is in the eye of the beholder and even a great CEO cannot undo a lousy investment or strategic decisions...
Yahoo turns blogging into main stream with Yahoo 360. CNET tells more.
Creating a new venture requires a lot of attention and consideration. Each venture has its unique features and twists. What comes to the funding structure one has to appreciate the needs of the business and adjust the financing accordingly. Not the another way around or force the old formula for a case that is not fit for it.
I regard VC as a special case for a funding - not the norm. In many cases one do not need VC money. It just don't simply make any sense. Either the growth potential is too small or the funding requirements too limited for a serious VC to get interested.
On the opposite spectrum are the cases that are very lucrative and require capital injection but still are not an ideal for VC funding from owners' perspective. Here the threshold is the usual VC mode and its consequences. Bell curve works for VCs as well and this is the problem here. Most of the VCs are not innovative. They are stuck to their own business development formula mechanically and are not adjusting it to the case. This is a problem if the case does not follow the regular requirements and needs. One can easily turn a superb case into a mediocre lukewarm venture by poor case handling and management. VCs have the force to alter cases according to their likings if they desire so. Only few are sensitive and clever enough to use their power wisely. Ruining is way easier than creating.
Between these two opposites the VC model works nicely if one knows the name of the game and is willing to play according to the rules and risks involved.
Gradually we're entering into a stage where our lives are exposed to others even without our own will. Digital technology enables to track us everywhere. If we are not captured by thousands of security cameras indoors or outdoors there is still a great chance that you're having a mobile phone in your pocket. Credit and debit cards, loyalty programmes, internet surfing, emails, instant and short messaging, wlans, ATMs, radio tags, and passports among other official ids...
We are turning into a huge aquarium filled with air.
Mercury News tells about 3-D image recognition. Oh, I forgot to add to the list web-forms :-) Well, you can avoid the Mercury News and some other non-essential ids by BugMeNot. And if there is a service one needs to register with confirmation email try this one: Mailinator.
How to become a successful entrepreneur?
Do it yourself. You have to take the responsibility, be persistent, do the hard work, be humble, learn, make mistakes but above all bite the bullet. There is no shortcuts or easy fixes.
Often we prefer to look solutions and let others to do the thinking and the hard labour instead of doing it ourselves. No matter whether it is the selling, putting the business case together or raising funds.
Various consultants, sales agents and outsourcing help you only as much as you are capable of utilising them. Getting external aid does not mean that one do not have to be in control and understanding the objectives and means to get there. Who do you think is making sure that your business targets are reached the optimal way? The external consultant, agent or your trusted business partner? It is pure naivism to expect others to do your your job and do the thinking for you.
Do it yourself does not mean that one should not get help and support from others. On the contrary - one cannot become successful alone. The pitfall is to rely on others on matters one has to understand and do oneself. The one who has the main interest and the most at stake is also responsible of the business. The hard fact is that it is a tough place to be and one is never enough. And there is always things to learn and more homework to do. There are always plenty of excuses not to do something or be aware of some issues. Mostly it is just pure ignorance and often pure arrogance. No one told making it to the top would be easy. That's what it takes - definitely not a journey for everyone.
There are no miracles or rainmakers. The successful people have earned their reputation and experience by hard work. They simply do more and are not afraid to put themselves at stake. Being vulnerable and humble does not make one less successful - often that's the only way to the top.