Investors don’t want to meet you. They wanted to be introduced to you • Hacker News Board

Re: Investors don’t want to meet you. They wanted to be introduced to you

#21

Post by JoeAltmaier » Wed, Nov 13, 2013, 7:41 PM UTC

cmdkeen wrote: post #12

JoeAltmaier wrote: post #4

Argues its impossible to find the needle in the haystack, so VCs use other founders to sift the chaff. But a VC was quoted that they funded zero cold contacts. That doesn't sound like its hard; it sounds they're incapable of evaluating cold contacts at all. I'm guessing they use contacts for their expertise, because VCs lack any.

Why would they run the risk if they have enough warm leads from trusted contacts? The VC money to startup lead ratio is obviously one sided to present sufficient profit motive to invest in cold introductions. If the VC market becomes sufficiently in favour of warmly introduced startups that there is profit motivation in investing in those startups that cannot garner warm introductions then someone will do it. But the…

The ecosystem changes: sometimes leads are scarce; sometimes plentiful. That can't explain never, ever investing in cold contacts.

Risk can be mitigated by doing some diligence. It sounds to me like the only diligence VCs do (are capable of?) is "what does some other smart guy think?"

I'm not trying to paint VCs as incapable, but this story makes it so likely. Zero cold contacts invested in? Zero ability to evaluate leads on their own? That's pretty damning.

Re: Investors don’t want to meet you. They wanted to be introduced to you

#22

Post by michaelochurch » Wed, Nov 13, 2013, 7:49 PM UTC

Not to kill the messenger-- OP is right-- but that "only our kind, dear" stance is an arrogant attitude for people who are spending other people's fucking money.

Fuck all of those emasculated half-men who can't bite down on a decision themselves, but must slurp down the pre-chewed, half-digested chyme of social proof.

I could say a lot more but it's already obvious where the good people stand.

Re: Investors don’t want to meet you. They wanted to be introduced to you

#23

Post by fearless » Wed, Nov 13, 2013, 7:53 PM UTC

michaelochurch wrote: post #20

pg wrote: post #3

I'm impressed with Jason's posts. He seems to be methodically working through all the misconceptions of inexperienced founders. This is an important and subtle one. Investors assume that if they're hearing about you first from you, you can't be any good. If you were good, they'd already have heard about you, because you'd have found a way to get introduced to them by someone they trust. Even if investors didn't start…

Investors assume that if they're hearing about you first from you, you can't be any good. If you were good, they'd already have heard about you, because you'd have found a way to get introduced to them by someone they trust. So you're admitting that they're social-proof whores who refuse to think for themselves, even about the subject matter of their own jobs? VCs should be mortally humiliated by the fact that the ga…

It's not an entirely unreasonable heuristic. The supply of startup pitches is vastly greater than the demand for them. Investors have to filter somehow. Getting a first meeting with any VC is pretty easy, even for someone with no connections whatsoever. There are hundreds of possible paths you can take to get that intro. It's not a big stretch to assume that any entrepreneur with a good chance of success should be able to clear that low hurdle.

Building a successful startup is 1,000 times harder than hustling your way into a VC meeting. If you can't do the latter, it's pretty likely you won't be able to do the former.

Re: Investors don’t want to meet you. They wanted to be introduced to you

#24

Post by [deleted] » Wed, Nov 13, 2013, 8:10 PM UTC

pg wrote: post #3

I'm impressed with Jason's posts. He seems to be methodically working through all the misconceptions of inexperienced founders. This is an important and subtle one. Investors assume that if they're hearing about you first from you, you can't be any good. If you were good, they'd already have heard about you, because you'd have found a way to get introduced to them by someone they trust. Even if investors didn't start…

[deleted]

Re: Investors don’t want to meet you. They wanted to be introduced to you

#25

Post by ig1 » Wed, Nov 13, 2013, 8:19 PM UTC

I think Jason is overly focusing on one side of the relationship (i.e between the startup and the introducer) when I'd argue in actuality a lot of the value of the introduction depends on how well placed the introducer is to evaluate you.

For example I would rank introducers as:

1) People who are superstars in your field (i.e Peter Thiel if you're a payments startup) or have great track-records in backing super-star companies across fields.

2) People who are experts in their field and the VC trusts. For example if you're in an adjacent space to a current portfolio company, getting an introduction from that portco (or even a reputable non-portco) carries a lot of weight. Or investors who have a track record in your field.

3) People who are customers of your product and the VC trusts. If your customers are gushing about you that makes for a great intro, if a portco emails their VC saying "there's this product that we use and love and the company is raising money" that'll get attention.

4) People who are well placed to evaluate your product/startup and have some relationship with the VC. Similar to (2)/(3) but they don't have to have a strong relationship with the VC. The VC trusts them because of their expertise not because of their relationship.

5) People who are well positioned to evaluate you and your team personally and the VC trusts. So for example people you've worked with in the past who will personally vouch for you.

Below that you basically have introductions from people who (a) Aren't in a position to evaluate your business and (b) Aren't in a position to evaluate your team. So it's basically a case of "we met these guys the other day and they seemed smart and had a nice demo" - i.e. the VC might spend a bit of extra time looking at it as a favour to the introducer but it's unlikely to be significantly better than meeting at an event, etc.

At that level a bunch of other factors come into play. If an investor is super-into your space or if you've got a strong resume/team they'll likely look at you regardless of how you came to their attention.

Re: Investors don’t want to meet you. They wanted to be introduced to you

#26

Post by beambot » Wed, Nov 13, 2013, 8:22 PM UTC

michaelochurch wrote: post #20

pg wrote: post #3

I'm impressed with Jason's posts. He seems to be methodically working through all the misconceptions of inexperienced founders. This is an important and subtle one. Investors assume that if they're hearing about you first from you, you can't be any good. If you were good, they'd already have heard about you, because you'd have found a way to get introduced to them by someone they trust. Even if investors didn't start…

Investors assume that if they're hearing about you first from you, you can't be any good. If you were good, they'd already have heard about you, because you'd have found a way to get introduced to them by someone they trust. So you're admitting that they're social-proof whores who refuse to think for themselves, even about the subject matter of their own jobs? VCs should be mortally humiliated by the fact that the ga…

I mean... pg kinda wrote an essay on this very topic: http://paulgraham.com/herd.html

Re: Investors don’t want to meet you. They wanted to be introduced to you

#27

Post by [deleted] » Wed, Nov 13, 2013, 8:29 PM UTC

michaelochurch wrote: post #20

pg wrote: post #3

I'm impressed with Jason's posts. He seems to be methodically working through all the misconceptions of inexperienced founders. This is an important and subtle one. Investors assume that if they're hearing about you first from you, you can't be any good. If you were good, they'd already have heard about you, because you'd have found a way to get introduced to them by someone they trust. Even if investors didn't start…

Investors assume that if they're hearing about you first from you, you can't be any good. If you were good, they'd already have heard about you, because you'd have found a way to get introduced to them by someone they trust. So you're admitting that they're social-proof whores who refuse to think for themselves, even about the subject matter of their own jobs? VCs should be mortally humiliated by the fact that the ga…

[deleted]

Re: Investors don’t want to meet you. They wanted to be introduced to you

#28

Post by squidfood » Wed, Nov 13, 2013, 8:29 PM UTC

michaelochurch wrote: post #20

pg wrote: post #3

I'm impressed with Jason's posts. He seems to be methodically working through all the misconceptions of inexperienced founders. This is an important and subtle one. Investors assume that if they're hearing about you first from you, you can't be any good. If you were good, they'd already have heard about you, because you'd have found a way to get introduced to them by someone they trust. Even if investors didn't start…

Investors assume that if they're hearing about you first from you, you can't be any good. If you were good, they'd already have heard about you, because you'd have found a way to get introduced to them by someone they trust. So you're admitting that they're social-proof whores who refuse to think for themselves, even about the subject matter of their own jobs? VCs should be mortally humiliated by the fact that the ga…

What? This is no different than any filtering in any domain. Who to hire? What movie to go see? You want someone who personally knows you, whose opinion you trust, to vouch for someone rather than going on a cold guess.

Re: Investors don’t want to meet you. They wanted to be introduced to you

#29

Post by avifreedman » Wed, Nov 13, 2013, 8:57 PM UTC

Another thing you can do if you are are a practitioner in a particular domain is to let your vendors and partners know that you're open to doing due diligence calls on their behalf. Then if you do take a call, be circumspect but honest in your advice/feedback.

That can be great for building your network for the day when you might want funding, advice, or 3rd party intros.

Re: Investors don’t want to meet you. They wanted to be introduced to you

#30

Post by kaa2102 » Wed, Nov 13, 2013, 9:18 PM UTC

michaelochurch wrote: post #20

pg wrote: post #3

I'm impressed with Jason's posts. He seems to be methodically working through all the misconceptions of inexperienced founders. This is an important and subtle one. Investors assume that if they're hearing about you first from you, you can't be any good. If you were good, they'd already have heard about you, because you'd have found a way to get introduced to them by someone they trust. Even if investors didn't start…

Investors assume that if they're hearing about you first from you, you can't be any good. If you were good, they'd already have heard about you, because you'd have found a way to get introduced to them by someone they trust. So you're admitting that they're social-proof whores who refuse to think for themselves, even about the subject matter of their own jobs? VCs should be mortally humiliated by the fact that the ga…

This makes me wonder what social network analysis for VCs and start ups would look like. It sounds like this model ensures that the well-connected founders get funded despite the merits of their ideas & implementation efforts.