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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.
Comments
From: Daithi,
Unfortunately this is a characteristic of many VCs that gives the VC community in general a bad name. I agree with just.a.guy - it is to keep a backup plan active. As an entrepreneur - I'd take hearing "no" or a "not now" (which is a good proxy for no and at least closes the immediate engagement) over nothing. Reputable VCs should take stock that this behaviour is reflecting bad on VCs in general and be more proactive to root out the practice.
Posted on:
October 7, 2008 3:20 AM
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It's common behavior and it's counterproductive for the VC as well. I have seen good deals and great people for portfolio companies that came my way via referrals by entrepreneurs whose companies I passed on. By having a quick, clear, honest conversation about why s/he's passing (and what might change that), VCs can engender good will that pays dividends later.
Yet so many continue to behave in a passive-aggressive and terribly arrogant way.