I’ve been getting inbound emails from VC associates who want to learn more about my company. We haven’t raised any outside capital, but we’re doing well and growing quickly. Are these conversations useful in any way? From what I’ve read online, you’re either supposed to decline unless it’s a partner or just take the call with the associate. Either way, I’m a little wary. Wondering if anyone can share their real-life experience?
Questions
How to handle inbound interest from VCs?
6 answers from the community
A· Jul 15, 2014
I would be wary too. I would insist that any VC or associate that you communicate with first show you a list of companies that their firm is currently invested in, or has invested in the past. That way, you can prevent VCs who have invested in a similar business from trying to use information about you to help the company that they've invested in.
A· Jul 15, 2014
Don't bother with associates, they are useless finance wannabes and future wantrepreneurs. They are nobodies.
A· Jul 16, 2014
If you're not raising $$ in the near future, then simply say no: Polite 1-liner saying thanks but we aren't meeting or taking calls as we're not raising, just staying focused on product now.
Should you be overly tempted to engage even if not raising: Beware of being pumped for confidential info that will be passed around and/or may be used to help your competitors that they are considering or have already invested in.
And when you're raising, insist on dealing with partner-level staff. Beware of "partners" that are actually associates - some VC firms now call all new hires "partner".
A· Jul 16, 2014
1) When VC's are interested in a vertical, they have the associates stack rank every company in that vertical so they can best pick the winners.
2) If one of your competitors has pitched that VC, the associate could be calling to do due diligence on you.
My advice:
- lead the conversation
- pepper them with questions and
- maybe even be so bold as to ask them point blank "are you actively looking for a company in this space" and "which one of our competitors are you currently talking to?" (listen for pitch changes or 'umms')
A· Jul 28, 2014
Thanks for this post.
I just received an email out of the blue from an analyst at a small VC firm located near one of our competitors (not in SF/SV).
Makes sense now :)
A· Aug 6, 2014
It always pays to be nice and have a brief conversation. Because they called you, you can ask questions about the firm, how they heard about your company, why they're interested in exploring an investment.
The defining question to ask is, "So tell me, what other firms in my space have you invested in?" If they haven't made any investments in your space, they won't invest in yours. Period.
Still, people move around and its useful to grow your rolodex. Today's nobody may be tomorrow's somebody.
And, the comment about vc's trying to harvest proprietary information from you is, sadly, spot on.