How to Get Venture Funding, page 17

How VCs Say No

If being in love means never having to say you’re sorry, being a VC means never having to say “no.”

While—rarely—a VC will tear apart a pitch as poorly conceived, this is actually quite unusual. Probably there was something really unprofessional (or disastrously stupid) about the pitch.

VCs don’t ever want to say “no” directly for a number of reasons. Primarily, every VC hears hundreds of pitches and can only fund a few. That means that most pitches are going to be rejected. But you never know when someone you rejected will have a brilliant idea. So it doesn’t serve to offend anyone.

You will rarely hear an explicit rejection. The implication is that if the process is not moving forward, a particular VC has implicitly rejected your pitch. But you need to be able to gauge the actual reception you have received so that you can hone your pitch and move on.

Understand Your Space

Any venture capital firm will want to be very sure that you have an excellent understanding of the space that you propose to operate in and the value proposition for your idea. Of course, prior working experience in the space is a good indication of expertise. For example, if you’ve just completed the sale of a photonics start-up to Cisco, a VC will probably give you the benefit of the doubt regarding your understanding of the photonics space. If you don’t have that kind of credential, it’s particularly important that you have both general knowledge of and specific information about the space your business will operate in.

It is vital that you be able to answer questions related to the size of the opportunity, the product, the customers and the competition.

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