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Why Wont The Venture Capitalist Return My Phone Call?

Q: We pitched to a venture group 3 times in July and August. They kept telling us that they were very interested and wanted to learn more about our venture so we shared complete details of our venture hoping that they would invest.

Now for last 6 weeks they have gone completely silent. They used to respond to our emails within hours but now…no response to emails or phone calls. Once we got one of their partner on the phone and he promised to call back and hasn’t yet. We would like to move-on. Are we nuts? Why would they spend so much time then behave like this? Why won’ they just say "NO" to us?

A: (Jason)  To answer your first question, no, you aren’t nuts and yes, you should move on.  Clearly they aren’t interested in funding your company.

The bigger questions is "why do some VCs act this way?"  I really don’t know or understand this behavior, but it’s not uncommon.  We hear on a regular basis from entrepreneurs that VCs frustrate them this way.

What’s probably happening is that they have other companies in their pipeline that are sorting higher in interest than yours, but they’d like to keep you as a potential option if their other opportunities disappear.  That being said, I’ve never heard of a situation where a VC lead goes completely cold and then becomes hot again.  Think of this similarly to any romantic relationship that you’ve ever had. 

We think it’s really important to say "no" quickly.  While it’s not always easy to say no (see Brad’s post on "Why am I passing?"), it really is the most fair thing to the entrepreneur, even if hard to hear.  Dragging the process along does no one any good.  Sorry to hear about your experience – not all VCs are this way. 

October 2nd, 2008 by     Categories: Fundraising    
  • Manav Misra

    Pitching to a VC is like any other sales cycle. There are numerous times when a potential buyer will be highly engaged, but then will suddently stop returning all phone calls/emails. As Jason says, it is a strong indication that other priorities have overtaken what you have to offer. Move on, but keep in touch as this may come around in some other shape or form.

  • Noodle on this

    VC's tend to want to keep the door open and that's a reason they don't say no. If they say no then they could be passing on the next great company. Every day that goes by and a VC hasn't invested in your venture is one less day of risk exposure to them…..

    In the last couple of months I approached two VC's who passed on our venture. But, what they gave me in return was immediate feedback that was constructive. In the future will I avoid these VC's? Absolutely NOT. I respect the fact that they have the nuts to say no. What I find most troubling in the VC community are those VC's who don't even take the time to send even an email acknowledgment that they've received my plan. How freaking hard is it to send a courtesy email. When you look at the management fees the VC's collect they should have enough staff or an automated system to say “Thank You for your biz plan. We will review and contact you in the next two weeks if we have interest in discussing….”. OTHERWISE sending a biz plan with zero acknowledgment makes you wonder if your plan is inadvertently sitting in the VC's spam folder.

  • Frank Ronchetti

    There's a simple answer to the question. Many VCs are inconsiderate jerks who think that their time is extremely valuable and yours isn't.

  • Phil Sugar

    I think this is common to all sales so its not a VC thing

    Getting money from a VC is no different than selling and therefore if you can sell to customers that's even better than trying to raise money but many times you need to raise money (that's a whole separate topic)

    In any case many times its hard to say no (even for me) because you realize when you say no you are going to have to justify a decision that you don't need to justify.

    So quite often I give people the “out” of being able to say no. In classic sales parlance its called the “takeaway”, but you basically give the person a face saving way of saying no, tell them and deliver on the promise of not one bit of argument on a no, but at least try to get a reason and above all make it clear you won't go into the selling is “overcoming objections” mode.

    You might never get the real reason but you can get some feedback.

    I try, try, try to always give a quick yes or no to all salespeople but sometimes it is hard and people make it hard on you. Quick off topic example, in this down market I'm only going to spend so much on projects. I thought about buying a new truck with the awesome deals, but my wife wants a new kitchen for our 1841 house. She's really been bucking it up lately with all my travel and the kids, so if you're a sales guy that tried to sell me a new truck guess what???? No luck. My wife said “new truck??? what about my kitchen???” Still every time I give a no I have to hear some long winded financing options, what can I do, blah, blah, blah….so its tempting to not return the calls……much easier.

    So I think part if the blame is on bad sales technique.

  • Mike

    We completely understand that our deal has to stand out from rest of the deals VC is looking at this moment…I tried to make it easy for them by writing an email that they won't hurt our feeling if they have changed their mind…still no answer.

    I don't buy that it is hard to say “NO”. If one is in VC business then they have to say No lot more than Yes…there are just too many reasons to say NO than Yes….This is a experienced team we are dealing with.

  • Phil Sugar

    If you gave them an out and they didn't have the dignity to take it then you are correct that is complete bullshit.

    I was pointing out that sometimes (you shouldn't have to if you put in three meetings) its best technique to pull a takeaway.

    I don't usually phrase it as “hurt my feelings” I usually phrase it as maybe circumstances have changed, or we're not a right fit, etc.

    Anyway as usual I take a bit of the con position, but I agree if you took someones time you need to have the courtesy of giving a timeframe for a decision, sticking to it, and giving an answer.

    I'm amazed at how many people thank me at getting back to them after an interview….apparently many people don't.

  • Too Many Notches

    Back in 98-99 (yes, several lifetimes ago) we pitched a VC who went cold, and 6 months later they saw us at an angel event with 50+ people lined up to go to the next stage, and they co-funded us.

    Yes, it was a different market. Yes, we were ALWAYS suspicious of their commitment. Yes, they lost a lot of value – actually, we all missed the market exit window by a mere 90 days – by twiddling their thumbs for 6 months.

    My experience over a couple of decades of this on the entrepreneur's side of the table is that herd mentality is still strong, and fear of looking the fool is a powerful motivator to not take a risk or make a decision, even a polite “no thanks.” Too many people check with biz school friends, overhear opinionated people at VC conferences and cocktail parties, and decide accordingly. Often they have calculated that they will be more successful to play it safe and keep close to the competition, thereby maintaining their hard-earned position than risk it through pioneering. Entrepreneurs and inventors just aren't wired that way. To be sure, I can calculate the politics involved, but having been there, it's very hard to get up in the morning for even a high-payiing job if it's not inspiring work.

    I'm awaiting a couple of such calls now. It's almost Halloween, the last time this calendar year when VCs decide to bury plans or fund them. I'm not expecting a yes, but I've been on teams which have pitched enough firms over enough years for enough ideas in different market spaces to know that there are some I call first, and some I don't call. In my experience people are industry leaders because they are not only insightful but also polite, even if brief. There are also the VC jerks out there, and those who think they should mimic those jerks, who are rich but horrible people. No matter how much money they have, they are stuck with horrible personalities. I don't want their money or them near my company, and especially not on my board.

  • VCs_suck_big_time

    People with money think they are on top of the world and can even insult Ph.D.s and veterans in the name of “diligence”. I shall be writing a book on my entreprenerual journey and shall extensively document these idiots who think they are demi-gods.

    Yes a polite “we are passing up the opp” would do; but what the heck they do? If they are so picky and successful, why dont they retire in Hawai near the beach? Its because, for them it a hit and miss; when they have a few hits under their portfolio, they think they are untouchable and know everything. Quick to judge others, but look at them, still working for a paycheck and bonus!

    BTW, there is plenty of racism also! color of skin matters; accent matters; need to have plenty of white skin in your team (if you dont know that). Silicon valley VCs are tad better as they got used to non-caucasian entrepreneurs shine.

    Anyways, I am determined to make it happen for my company and have the last laugh (hope Jesus is willing God bless ;)

  • Deena

    Unfortunately I feel like many people don’t like confrontation and this translates into how VCs (or any other person in a business) do their work. Some people don’t take into consideration concerns of others and when they are the ones with the money they feel it is okay to lack communication. It’s sad, but it’s something to prepare for.