As an entrepreneur, I always got frustrated with the VCs who would take forever getting back to me if they ever did. When I was working on my third company, I used to tell people that I still hadn't heard back from a very famous venture capitalist on my first company after I'd pitched him and his partnership and jumped through tons of hoops for him. I was always happier to get a quick "No" versus a long drawn-out nothing. That's why, when I made the move over to the dark side, I planned to always give entrepreneurs a quick "yes" or "no." The road to hell is paved with the best intentions. So why then, is it so difficult?
While I still try to get back to people as quickly as I can, it isn't as easy as I'd anticipated. For me, it comes down to one primary issue, what I will refer to as the "let me sleep on it" problem. But what I witnessed as an entrepreneur and have seen more recently through fundraising activities for my portfolio is that a second reason seems to be responsible for a lot of the long drawn-out nothings that my venture brethren are so famous for.
After I've met with an entrepreneur, I subconsciously assign the opportunity to one of three broad categories: the fast no's "FN", the fast yes's "FY", and everyone else "EE". The FN and FY deals always get a quick response. If it's a FY opportunity, that doesn't necessarily mean I'm ready to pull out my checkbook, but it does mean that I'm going to jump on it quickly and start digging in. Again, for these entrepreneurs, there is enough communication that they know where they stand and if/when I decide not to move forward with an investment, I communicate that as quickly as possible. The challenge comes with the EE deals. Those entrepreneurs certainly left a positive impression, if not they would have fallen into the FN category, but I want to think about it - to "sleep on it". The challenge comes when I've let "let me sleep on it" turn in to two weeks. If I haven't heard back from the entrepreneur in the intervening time, I just let it drop. Even then, I feel bad about not dropping the entrepreneur a note, but at some point it feels a bit out of place. Should I still be sending the entrepreneur a note even if it's long after the fact?
What I've seen through the fundraising activities of some of my portfolio companies feels like something wholly different. When I was an entrepreneur, I'd always heard that VCs held off on saying no because they were trying to maintain option value. By that reasoning, if they don't say "no", then if something big happens, they would always have the option of coming back and saying "yes." As an entrepreneur, I always thought that was bunk. The people that were doing that were pretty transparent, although they thought they weren't, and they would be the last ones I would turn to if something big happened. Unfortunately, the longer that I'm in the business, the more that I see that kind of behavior and the more it feels like a major culprit for the long drawn-out nothings.
Finally, it's very important that I make clear what stage of evaluation the opportunities I am talking about are in. They are entrepreneurs I have met with or who came through a warm introduction. If I've received an email over the transom, a message in my work voicemail, or a letter in the mail, unless these solicitations come through trusted introductions, I feel no obligation to respond. If I did, I'd be responding to that guy from Nigeria right now instead of writing this blog :-)
