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When they say No...

Brad Feld wrote a post entitled "Don't Ask for a Referral If I Say No."  Good insight there into the mindset of a VC who tries to do an entrepreneur a favor by giving them a rapid 'No', but is then conflicted when asked to give the entrepreneur some additional help with VC introductions.

Too many VCs are hesitant to say No to an entrepreneur.  They prefer to preserve the option to invest later if the deal starts to look better (or if others get interested).  It's much tougher, but better for the entrepreneur, to give a No once you have decided to pass.  This saves the entrepreneur time.  I always tried to give feedback when I gave a No to a deal.  Maybe the target market wasn't interesting to me.  Maybe the deal didn't meet my firm's investment targets.  Maybe I didn't believe some of the assumptions behind the plan.  I try to be as open and direct as possible, probably only holding back when it was the entrepreneur themself who is the problem.  Maybe I'd say -- the team needs strengthening...

All of this feedback is my opinion.  Maybe I'm wrong.  But, if a VC says No, they have made up their mind.  It's not productive to try to change their mind through lots of follow-up.  If you want to keep me posted via an occasional email about your progress, that's fine.  Maybe we can meet again in six months or so.  But, don't try to overcome my feedback as if they were sales objections.  That's not the dynamic that is in play.

Also, as Brad says, asking for an introduction to another VC is a bad idea.  Unless the deal just isn't in a sector where my firm invests, I have to tell the VC that I passed and why.  I need to be honest with them as it's part of my relationship with them on sharing deals.  Instead, try to improve your plan and presentation first, and then get a trusted introduction to other VCs from their own non-VC contact network.  That's much more valuable.

You can get a lot out of a No from a VC.  Just not introductions to other VCs.

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