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What Does A VC Mean When He Says Your Product Is “A Feature And Not A Company”?

Question: What does a VC mean when he says your product is “a feature and not a company”?

This (usually) means that the VC believes the opportunity you are pursuing isn’t a big enough opportunity for them to invest in.  In other words, what you are building should be a feature to something else already out there, instead of a stand-alone company that will generate the type of returns that the VC is looking for.  For instance, assume you are building something that fits inside an email client that does X.  (Perhaps “X” translates languages).  While super helpful to some folks, a VC may take the postion that this should be a feature or tool within the email client, but not an opportunity to build a large company with paying customers around it.  Of course, we can debate whether this is a correct statement, but in the eye of the VC this is how it is.

One thing always to consider with VC feedback to your company, however, is whether or not you are getting transparent and honest feedback.  In our experience, few VCs actually give feedback like this, so always have your skeptic brain alert.  One never knows what the real reason for investing might be.  Perhaps the VC is out of money and can’t even make an investment, but doesn’t want to admit that and thus the feedback.  This is just a general comment and not one particular to your question.

January 7th, 2012 by     Categories: Product     Tags: , ,
  • Abraham Si

    This is eye-opening. Wish that I heard this explanation a year ago…

    • http://twitter.com/rwang0 R Ray Wang

      It may also mean that they just asked their other portfolio company to add this feature to their list to compete w/ you =)

  • http://twitter.com/jesse_bushkar Jesse Bushkar

    I was just tweeting with @joshelman:disqus  and @hunterwalk:disqus  about the exact same thing.

    For the devs out there:

    feature != business

    idea != business

    business === business

    Thanks @bfeld:disqus  for the straight-forward answer.

    • http://www.feld.com bfeld

      This one was all @jasonmendelson !

      • http://twitter.com/jesse_bushkar Jesse Bushkar

        Ah, gotcha, I just followed your Twitter link.  Good stuff all around, thanks!

  • http://twitter.com/MarkHall123 Mark Hall

    I’m inclined to think that hearing this response may involve ‘other’ factors about the VC’s intent. As R Ray Wang eluded, you don’t know what real factors are at play. If your business has received enough traction/market validation to the point that you are seeking venture capital, the opportunity of the market size may already be self-evident. Proceed with caution and have faith in your gut feeling/common sense.

    • http://www.feld.com bfeld

      Yup. Often VCs are just trying to say “no” without really giving a reason and this often falls in the “non-reason” category.

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