Entrepreneur means you can't give up
Jeff Bussgang from IDG Ventures wrote recently about a breakfast sponsored by AlwaysOn to promote their upcoming AlwaysOn - East conference. Jeff points out that many entrepreneurs play 'Blame the VC' when their business plans don't get funded. It's true that some entrepreneurs are so enamored with their business plans that they feel that the VC who passes on the deal must be stupid. And, if 50 VCs pass on the deal, they all must be stupid. But, I haven't found this view to be very prevalent in the entrepreneur community.
I was at that breakfast, too (and had the pleasure of sitting next to Jeff). My view of the entrepreneurs' tone was slightly different. There were quite a few entrepreneurs who spoke up about the fact that their business plan had been funded, but not by Boston VCs. Perhaps their plan was funded by angel investors, corporate investors, or the ever looming West Coast VCs. I have some expereince helping out entrepreneurs whose plans I think deserve to be funded by VCs. Some of them have a lot of commercial traction. Despite some introductions, Boston area VCs haven't moved ahead and funded these entrepreneurs.
But, these entrepreneurs aren't deterred. They have raised money from angel groups and individual investors. They are courting VCs that are out of town. And, they have modified their plans to take less initial capital in order for them to prove some commercial viability before they go try to raise more money.
If these entrepreneurs succeed, it doesn't mean that Boston area VCs are dumb. Maybe they are too conservative. Maybe they don't understand the market segments that these entrepreneurs represent. Maybe they are unwilling to back first time CEOs or willing to build out a team after they fund the company. Maybe they can't justify a small initial investment. The best entrepreneurs won't let this stop them.
Instead, these top entrepreneurs with their strong plans will let the marketplace show who is right. There is a lot of capital out there from many sources. A great entrepreneur has to be a great sales person. If you can't sell your plan to anyone, then either you aren't good at sales or the plan really is flawed. The whole world can't be dumb, can it?
Since we are raising money now for our new investment fund, I have a front row seat for these types of meetings. Some of our target investors have strategies that don't line up with ours. Others only look for funds with a certain profile that perhaps we don't meet. It's our job to find investors who are the right match for our fund. There seem to be more than enough out there of this type that we can get our fund off the ground. We're very encouraged by the response and optimistic about our success.
But, if we aren't successful, it will be because of a shortcoming of our team or strategy, not the fault of our target investors.