Entrepreneur Guidance: Trust your gut when fundraising
This is the first post in what will become a series of short articles containing observations and experiences related to starting a company and raising money. Let us know if you’d like anything specific covered by commenting on the posts.
A recent experience with a VC reminded me of just how important it is to trust your instincts and be objective during the fundraising process. This can be pretty tough if you are raising money for your own company. Entrepreneurs by nature have to be optimistic creatures, because starting a company, especially one in tech, is a roller coaster of ups and downs.
VCs are all over the place with regard to how they communicate, set expectations, and respond to entrepreneurs so there is no real play book on how to read or react to the signals you might get. In a recent case, I decided to overlook a lack of responsiveness and lack of enthusiasm as a style issue. I decided that this VC just wasn’t very proactive or open, and but convinced myself they were still seriously interested in the deal and it was worth pursuing based on the fact they were “saying the right things” when we did talk.
There were a number of occasions I’d hear “I’ll give you a call this week”, or “I’ll follow up”, etc and of course never hear from them unless I poked quite a bit. It has been said that dealing with VCs is like dating, and in this case it’s a great analogy. If they say they are going to call and they don’t, they just aren’t that into you! I should have trusted instincts and quickly moved on, but I convinced myself that the deal would get done and we were getting enough positive signals to keep the relationship going. Despite popular opinion, VCs are people too, and some are transparent and up-front while others don’t respond well to no-bullshit direct-questions. If you know who you are talking to and how they tend to operate it can help your read of the situation.
The real advice here is that as hard as it may be during a fundraising process, its important to take a step back and looking at situations as objectively as possible. If your instinct tells you something isn’t right…listen to it. It will pay off in the end. Just like dating, BOTH people should want to be in the relationship for it to work.
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