Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

“Yes” means “no”: The language of VCs

jacobbartlett.substack.com

Post reply on HN
Print view View original

161–170 of 217 posts

Re: “Yes” means “no”: The language of VCs

#161

Post by marcell »

tptacek wrote: post #113
marcell wrote: post #104

Earlier quoted context omitted.

You can collect these “soft commits” to make it easier to land a lead. You can tell the potential lead, “we have $X in soft commits, so if you become our lead, our company will have total $X + $Y funding.” It makes your pitch to the lead more compelling.

They'll ask who your "soft commits" are, and they'll read between the lines; if any of them are significant firms, it'll get read as "those firms refused to commit, there must be a reason". Michael Seibel had a video a long time ago from a YC VC class, and related his strategy to work around this, of setting a very short deadline --- like, do all the meetings inside of a week, and tell people "get your term sheets in…

I heard the short deadline advice also, it’s nice idea but has flaws:

- most VCs will have at least a few days delay on when they are willing to meet you

- intros are required, and often intros come out of other VC meetings. This means you can’t shotgun everything

- if a VC wants to meet after your “deadline”, will you actually say no? Who has more power?

If you are a hot deal or Michael Seibel himself, the short deadline probably works. For mid level startups it’s not as easy.

Re: “Yes” means “no”: The language of VCs

#162

Post by insanitybit »

wg0 wrote: post #138
nradov wrote: post #47

Earlier quoted context omitted.

A lot of venture backed companies aren't just building an "app". Spend some time looking through the portfolios of major VC firms, especially in life sciences and medical devices.

Yeah maybe handful of them. That too are also mostly lunatic ideas with little grounding in solid serious rigorous academic and scientific research with no feasible functioning product in sight or something financially viable on the horizon. It's not that they already have a research outcome that they need to "productize" with manufacturing and distribution channels. Things like Neura Link, Carbon capture, fusion and…

You're coming off as very biased. My startup was certainly grounded in research and rigor, I even spoke with academics at universities about the work. In many ways, my project was productizing some state of the art CRDT research by applying it to a domain that is in dire need of solutions - information security.

Most founders I met were doing similarly well-founded work. You're thinking about a tiny fraction of the VC market - the moonshot startups that make the news. Most people are raising money around very reasonable ideas, of course, since VCs obviously have to minimize risk for some of their investments.

Re: “Yes” means “no”: The language of VCs

#163

Post by abc123abc123 »

a1371 wrote: post #62

I played the VC game. We were attending every opportunity to give 10% of our business for $200K. No one would bite. Gradually, it felt it was easier to land customers than VCs. Then there came a moment that I wish for every founder. Our revenues started not only paying the bills, but also fueling growth. It felt as if a veil was lifted from my eyes. Now, it feels like all those pitches were a waste of time.

Amen!

I tried VC:s and didn't work (I pitched Netflix before Netflix and was told laws would crush it). Then I tried bootstrapping and getting customers and the veil was lifted from my eyes! Cannot recommend it enough. Don't waste time with VC:s, put that time into getting customers. If you are successful you can always sell the business to someone later on if/when you decide to retire or try something new.

Re: “Yes” means “no”: The language of VCs

#164

Post by sjducb »

daft_pink wrote: post #30

Maybe it's my business major background and my skepticism of all these tech companies that have no reasonable business model to make $'s, but unless there is an obvious need for investment like buying a large amount of real estate or machinery, why would you need VC money to build an app after you've already spent several months doing it? It should run on it's own and not need investor money. You shouldn't be focused…

Imagine it costs $3/month to provide the service to a customer and the customer is paying $3/month.

You can make a good case that most of your costs are fixed. So that if you have 100x as many customers it’ll cost you $0.03/month to provide the same service to the customers, but they still pay $3/month.

You need VC money to acquire customers and grow. Then your business will become profitable because of the economics of scale that are inherent to software.

Re: “Yes” means “no”: The language of VCs

#165

Post by rmbyrro »

j-a-a-p wrote: post #159
FreakLegion wrote: post #130

Earlier quoted context omitted.

This is the most accurate comment I've seen here. Sequoia, Benchmark, Kleiner, etc. will all tell you "no" and why with minimal turnaround time. The same is true for second-tier players like Craft, smaller shops started by breakaways from the big firms, and scouts. Good VCs are professionals and have no interest in wasting your time or theirs. A "no" now never precludes future participation anyway; they don't need to…

Hmm, my experience with one of the largest investors in NL was a full verbal 'yes'. The investor was actively involved in the hiring process (that is how I got in). A founder put in his cash (think a small apartment) for a lower single digit percentage of agreed valuation. I signed for something smaller / similar but without bringing in cash. In reality the money never arrived, they forked in few times 250k. The othe…

What is NL, the Netherlands?

One of the largest investors in a given location might not be "top-tier" in the overall VC market.

Re: “Yes” means “no”: The language of VCs

#167

Post by davedx »

threeseed wrote: post #65

Have actually read a few founders now who had no connections and just treated VCs as sales targets: 3000+ investor cold emails, 100+ meetings, 3 term sheets, 1 deal. Reading this it makes me wonder if this isn't the best strategy.

Sounds like a huge waste of time

Re: “Yes” means “no”: The language of VCs

#168

Post by rmbyrro »

Aurornis wrote: post #114
lisper wrote: post #3

It's not so much that "yes" means "no" but that VC's never actually say no, and it's easy to understand why. Whether or not they actually fund you, they always want you to think that they are going to fund you because that way they hedge their bets in two ways. First, if they learn new information (like if you suddenly start to get traction) they can change their minds without losing face. Second, and more importantl…

Top tier VCs will definitely tell you “no” and they’ll often get there quickly. It’s more often the small funds, the inexperienced family offices, and the junior associates that don’t have authority who string companies along forever. They don’t have as much authority or funds to actually work with, so they have a lot of time to string you along. Lumping all VCs together really doesn’t lead to accurate descriptions o…

Redpoint will also give you a straight no and share a lot of their rationale.

You can't be mad at the no because you learn so much from their response that you feel thankful.

Re: “Yes” means “no”: The language of VCs

#170

Post by wg0 »

insanitybit wrote: post #162
wg0 wrote: post #138

Earlier quoted context omitted.

Yeah maybe handful of them. That too are also mostly lunatic ideas with little grounding in solid serious rigorous academic and scientific research with no feasible functioning product in sight or something financially viable on the horizon. It's not that they already have a research outcome that they need to "productize" with manufacturing and distribution channels. Things like Neura Link, Carbon capture, fusion and…

You're coming off as very biased. My startup was certainly grounded in research and rigor, I even spoke with academics at universities about the work. In many ways, my project was productizing some state of the art CRDT research by applying it to a domain that is in dire need of solutions - information security. Most founders I met were doing similarly well-founded work. You're thinking about a tiny fraction of the V…

I'm glad that you're working on something solid. You're not I'm addressing to. Rather the opposite. You are (or were) building something that has rigorous formally documented academic work.

> You're thinking about a tiny fraction of the VC market - the moonshot startups that make the news.

Exactly, that's why I implied that it's a very very small number. May be less than a fraction.

CRDTs would be interesting area to watch. :)

Post reply on HN