yeah vcs talk a bit, but not about sensitive stuff. and none of the ones i work with t send plans around. that would be wrong. and anyway we’d get a seriously bad reputation seriously fast.

it happened once last year when someone junior sent out a plan by mistake to someone externally. we screwed up. we apologized.

if we talk at all, we usually talk about a founders’ reputation — are they as good as they claim to be? — not really about the concept (which is usually less than 10% of the value in any case), and rarely when it’s a live deal — for obvious competitive reasons. you’d be astonished how derivative most of the ideas we see are. ideas are cheap. the tough stuff is execution.

good vcs build their reputation on being discrete about what they see. don’t pitch to any other kind.

talk to seasoned entrepeneurs about the guys who backed them. were they schmucks? did they add value? were they discrete?

one thing is true: get a good lawyer. a really good one, who’s done exactly this ten times before. otherwise you’re educating them, and they’ll waste a lot of your and your investors’ time, goodwill and money. oh, and it reflects badly on you because it makes your investor think: huh, this guy can’t tell the difference between a good lawyer and a bad lawyer; wonder if he can tell the diff between a good employee and a bad employee?

He promised that he would immediately delete our materials and not share them… but I guess I can be assured that our plans ended up in the hands of those companies. I hope they have more integrity than that. What do you think?

Back in 2001 I tried to launch a start-up based on a I/O technology that would have beaten anything available then AND today but what I heard is that a technology was too far from the customers.

VCs, back then, were investing in boxes that attached to networks and did something. The attractiveness of those companies were that they made a product that the end customer would be purchasing.

If you have a technology, you need to put it into a core, then the core into a chip, then the chip on a board and the board in a box. Right now cores are selling well for my company, so customers are needing cores, but would an IP creation company be fund-able?

RAUL

If one could get 30 meetings in 30 days, which is highly unlikely, let’s say even in 60 days, it’s also 60 days of not running your company, not focusing on it, and being on an emotional rollercoaster. It can be draining.

Most entrepreneurs who seek funding aren’t doing it the 2nd time around (and those from previously successful companies don’t have to make the rounds anyway) so they don’t have the luxury of seeking investment purely for fun. They are *relying* on getting money, and this IMHO is a shotsighted plan. Most companies who seek money don’t get it from VCs.

In my experience, most VCs have accomplished very little in life - other than going to an Ivy league school. Think of them as spectators handing out other peoples money. Make them feel like they are making a smart investment by supporting your plan with tangential facts from legimate sources. If done cleverly enough, you can convince people of just about anything, including “smart” VCs.

You want to control the conversation; don’t give out any handouts during your presentation.

Borrow impressive resumes. Informal advisors with impressive resumes will make the funds flow.

Avoid answering questions directly; it only gets you in trouble.

Watch American Greed on CNBC. Study how con men pitch scams. Some of the greatest con men have raised incredible amounts of money. If you can’t raise $150 million for a bank that doesn’t exist, get a job.)

http://www.thefunded.com/funds/item/3208

- Founder Liquidity (Faramarz): Many entrepreneurs are posting and discussing that they are selling a portion (not all) of their common equity position to venture funds in a transaction to take hundreds of thousands or millions of dollars individually. This incentive, which you can see in the term sheets on the site, has been offered in both early and late stage rounds. It is discussed as a tactic by VCs to win deals in competitive situations.

- Sharing Financials (jro): The likelihood of VCs treating your financials in a confidential manner increases with VC interest in a particular deal, which is extensively discussed on TheFunded.com. Many Members recommend sharing light financial in the introductory meetings and then only sharing detailed historical data and working models in later diligence, potentially after a term sheet is signed. There are numerous complaints by Members who have received materials of competitors or have seen their own materials used in pitches by related companies.

- 30 Meetings in 2 Weeks (antje wilsch): This refers to introductory calls when initiating a formal fundraising. Many inexperienced entrepreneurs pitch a few VCs per month for four to six months, word gets around about the deal, and Members complain that it becomes difficult to secure new meetings as a VC has already heard about the opportunity. Some of the more experienced Members have created online information rooms and a much more consolidated process, pitching all of their target venture partners in less than a month and having all of the material ready for the firms to make decisions. While 30 meetings is an aggressive target, a large number of Members claim to have to meet with in excess of 30 funds and as many as 60 funds before receiving terms. On the other hand, some entrepreneurs get terms in less than 5 meetings. From feedback on the site, it would appear that 30 funds is a middle target to pitch with the goal of receiving multiple competitive offers.

Hope that this helps to clarify some of the points. In general, the goal of the talk is to provide a synopsis of views expressed by the Members after reading approximately 10,000 posts, extensive discussion, and nearly 100 added term sheets over the last 45 days.

um, i work with a lot of start-ups and I *highly* disagree with this ratio. 1 term sheet per 10 pitches? No company, unless super well connected or super hot, could EVER get 30 meetings in 2 weeks. Most would be lucky to get 1 per day and that would be really pushing it. Less than 1% of all companies who go seeking funding ever get it, so those two sentences are extremely misleading.

“It gets worse, if a VC likes you, they will tell the other VCs that you suck.”

VC funds know that if they rely on their VC brethren for input without a grain of salt, they’re never going to get a winning deal in their lap. Plus, the VC business doesn’t work in a time vacuum. If a VC partner bad mouths a founder, but invests in them later, they tend to look either stupid and/or dishonest. Either way, their colleagues know.

“Do not throw in detailed financial statements.”

True, don’t use the accounting-esque type of statements, but you better have some key numbers, such as the size of the market.

The overall message is good, though.

Harry “looking forward to the deck” Wang