Getting a ghost is never fun. Especially if you are a founder who is looking for capital from investors.
It’s similar to a date. You said, “Why hasn’t this person returned to me? Did you do something wrong?” Did investors dislike the product? Did they personally not care about me? ” It’s enough to drive everyone like crazy.
Ghosts are an undeniable signal of lack of interest. If the VC wants to invest, they will definitely answer your cold call or return to you after the pitch.
According to some VCs who spoke with TechCrunch, there are various reasons why the VC might disappear after the founder thinks they agree to the meeting or, worse still, one.
time
Time is a lack of resources for people, Mercedes Bent, partner at Lightspeed Venture Partners, wrote in a LinkedIn post on the topic of VC Ghosts that went viral. The VC would naturally spend more on it, more on startups where they might see the possibilities.
“Writing thoughtful rejection requires effort. When the path doesn’t “convert” [to an investment]it is often stripped. I’m not saying this is a good thing,” she wrote in a LinkedIn post.
Bent also notes that as the investment climate has changed over the past decade, VCS has to make decisions faster, and therefore less time has passed back to prospects.
“VCs are bulging at breakneck speeds with more companies, more capital, more pitches,” she writes. “The emphasis on volume and speed means there’s little room for the intentionality and personal touch that once defined the industry.”
Such rapid growth, she added, has created a culture of churn and baan where relationships feel more and more transactional.
Sheel Mohnot, co-founder and general partner of Better Tomorrow Ventures, says things most often slip through the cracks when he gets “super swamped.”
“This isn’t about founders, it’s always about what else I’m doing in my life, like if we’re fundraising or if it’s a week like Founder Camp, AGM, Money 2020,” he told TechCrunch.
Eric Bahn, co-founder and general partner of the Hustle Fund, relies on automated email responses to help manage the influx of inbound trading opportunities received in your inbox. He estimates he receives about 30 inbound pitches per day.
“I have a permanent out-of-office email message setup that responds to all messages about how founders can interact with their investment teams via our website form,” he told TechCrunch. “Our team takes all submissions seriously, but we cannot respond to all email solicitations as long as I wish.”
Now, if he’s already in a meeting with the founder, Byrne insists he’ll never “ghost” them.
“When I have to pass a deal, I explain why I am passing and share my feedback,” he said. “This is simple etiquette and I hope more VCs do it more consistently.”
Red flag leading to rejection
Ironically, one investor who doesn’t want to name a name told TechCrunch, citing his AI-generated frustration with the founder’s cold outreach: I get dozens of people with the same structure so I can say it is being generated, but with different words, there is always a strange inaccuracy. Just burn all the written outreach as a channel to contact new people. ”
So, VCS may love to support AI startups these days, but many of them write emails, but they don’t want to be the recipient of them.
“In the end, it’s likely that AI is a generated message, so you’ll just filter emails from unknown senders,” she added. “So, to meet new people, you literally have to socially come across them (a warm intro or in person). Back to the stone!”
One of the things that really bothers Byrne is the lack of self-awareness. For example, don’t try to argue that startups do not have competitors or existential risks.
Byrne usually asks the founder what can kill the business during the pitch. The shocking number founder responds: nothing.
“Everyone with a simple self-awareness knows that it’s absolutely not true,” he said. “So many things can threaten your business. A market facing new compliance or regulations. A new pandemic.”
As a potential investor, Byrne wants to know that you don’t just look at risk, but also have plans to mitigate them. “As the legendary CEO Andy Grove of Inter, I once said: Only delusions survive,” he said.
Monott says he is careful when founders can’t explain how to grow their business beyond the original concept. But the opposite is true. Note that unrealistic expectations have been erased by founders who claim that startups are “instantly disrupting the entire industry” or projecting “very optimistic financial forecasts without solid evidence.”
Other things he thinks are turn-off: visible tension or lack of complementary skills among founding team members suggests potential collaboration issues. In contrast to “building sustainable and valuable business”, there is a lack of technical depth and fundraising.
Rex Salisbury, founder and general partner of Cambrian Venture and former partner of Andreesen Horowitz (A16Z), wants to know that the founder is on top of things. He displays a pitch deck with a filename six months ago recording the date as a red flag. However, if you misrepresent the numbers, they will be completely blocked from Salisbury.
Founder’s actions
There are other actions that end the conversation with the VC. For Byrne, if the founders are racist or sexist, they are cut off.
“The founders actually called once competing founders the C-word before me,” he shared. “I am not tolerant of spending the next decade working with people who have little respect for others.”
It should also be noted that even if investors reject them now, they may consider working with them later. So being rude when turned down is likely to kill that possibility and prevent the VC from talking to the founder again.
Byrne sometimes says that his company will provide detailed feedback on rejections, and its founder will “repeat your name and/or even threaten you.” He realizes this is happening to his female colleagues more than he does.
“I’m grateful when that moment happens because it means we made the right choice to not choose to work with its founder,” Byrne told TechCrunch.
“These people are also blacklisted. We will never respond to them again. And the interactions are recorded in an internal database, allowing our institutions to avoid them forever,” adds Byrne.
Naturally, all VCs said that fraud was an immediate contract killer. Addie Lerner Katz, founder and managing partner of Avid Ventures, noted that dishonesty can occur in a variety of ways, including exaggeration and lack of transparency.
She also got off when the founder spoke negatively about current or past investors and colleagues. Negative reference calls are another cause of Lerner Katz pause.
“In each of these buckets, we take the ‘yellow flags’ very seriously and usually consider them disqualified,” she told TechCrunch.
Monott recalls an incident in which the founder lied about dealing with another startup. Other startups just happened to be in Monott’s portfolio.
However, lies about metrics, team capabilities, market size, or technology performance are often easily exposed by VCs.
“It happens more frequently than you think,” Monot said.
All VCs believe that if they actually have a pitch meeting with the founder, there is no real excuse to not send a simple “No Thank You” follow-up to the founder. As Bent says, ghosts happen anyway.
“I’m not saying that any of these are good reasons. It’s real. It’s a game,” she wrote.
However, given the risk of behaviouring badly against VCs who have stopped talking to you, she also suggests that the Golden Rules apply to both parties. “Treat people the way you want to be treated.”
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