It wasn’t about lack of ideas, cap tables, market strategies, time management, how to get the essence out of the pitch or haw to spot the ideas. If someone is saying that there is problem with the deal flow, it’s not really the case. If you are open, passionate and curious about what’s going on on the market, if you want to help, people come to you and they are willing to share their vision. The problem is when you have so many amazing companies and you need to say ‘no’ to most of them. Sounds familiar, right? I really struggled with this part when you really like the team as well as the idea and it’s just not the deal you are going to invest in having hundred others on the table. They are doing great things, and it’s not because there is something wrong there (then saying no is much easier to articulate), it’s just simply not for you but how to explain it to feel it’s right?
I decided to ask other investors to tell me how they feel, what they say and how to embrace this situations that actually happens few times per day and isn’t any easier with every other one coming next. After some time I came up with few rules I follow and I think it works quite well.
Rule number 1 – RESPECT. This one I already knew but it was nice to have it confirmed by other, much more experienced investors. Founders dedicate enormous amount of time to their project, we sometimes have no idea how much work they put into it, and respecting them is juts the way you should go.
Rule number 2 – RECOGNIZE. Whatever founders are doing it’s already something more than average person is up to. They chose not the easiest way to live their life but often more exciting, more adventurous, more stressful but totally in line with their feelings and vision of the world. Most of the time they want to help other people, solve problems, push the innovation forward and make our life easier. We wouldn’t have progress without people who just roll their sleeves up and work crazy hours to take the idea off the ground and make it global.
Rule number 3 – BE QUICK. The best thing we can do is to give founders quick answer. Do not keep them waiting and thinking that maybe it will end up as a good fit. They probably have couple of other conversation open and giving them quick feedback just save their time (make your inbox and head less heavy ;)), they just cross it out and move forward.
Rule number 4 – BE CLEAR. It may sound like not enough to reject the deal but when investors say it’s really good but we will pass, it’s really true. It’s 1 idea out of hundreds they consider for investment (having for instance only 3 deals per year to invest) and maybe this explanation sounds rubbish but it’s just true. It’s good and you as a founder, should go for it, totally! but it’s not the best fit for our investment thesis, and we want to stick to what we believe is the best focus for us. For example, if someone focuses on the US only, it’s just because they would not be helpful for you if you are in China and they do not have people there who could support you along the way.
Rule number 5 – HELP. If you have some time, help the founder, give them feedback, recommend some ideas. I usually send them VCmatchAPP, amazing tool built by NFX, that can shortlist investors taking into account your business characteristics. There are thousands of investors around and it’s great help to have a list of VCs who entirely focus on your market and can be the ones who are most interested in the space you are in. Doing it on your own and sending random shots is not really effective.
The last but not least, I love cold emails. I think that accepting only recommended deals limits the market potential and is just not fair. There are a lot of amazing people starting up with brilliant minds, bold ideas, innovative solutions who are just not connected to some particular investor circle. They may find the way to break in, that’s fair, but I’d give a chance everyone and it’s here all about making the market more inclusive, giving access to capital to everyone no matter the gender, connections, nationalities, etc. Saying ‘cold emails’ I do not mean really cold, copy – paste the template but introduction that is really thoughtful, shows you learn about the investor, you know who you are talking to and why it may be interesting idea for them. I’m telling you, you can easily say if it’s standardize message or if someone really knows about your thesis, market focus and deals you’ve done so far. So let’s be open and consider all people equally!
It feels good 🙂
