I had a very interesting experience this morning... I got turned down by a VC for the Path 101 angel round.
Of course, we're very early and I didn't really expect to get any VC interest to begin with at this stage, but it was just a weird feeling because I'm not used to being on this side of the table.
It was a little bit like that Simpsons episode where Nelson walks by a mirror and does his "Ha ha!" laugh and then realizes, "Oh, that hurts." (One of my favorite Simpsons moments ever.)
I've turned down tons of companies on behalf of USV even before they got to a funding meeting, but when it's your company, I'll tell you, it really smarts. I totally get it.
Even more so, I understand the animosity that entrepreneurs seem to have for VCs because of the impression that they only want to take a risk on you after you've already executed. I'm not saying that's the case, or that VCs aren't well founded to ask to see more traction, but I have to say that's what it honestly feels like.
But, rather than just sit here and complain about it, I'm thinking about what is to be learned from these experiences. Here's what I have so far:
- First, if nothing else, practicing your pitch and seeing what resonates with people is enormously helpful. This is partly why I'm such a big believer in anti-stealth. You should get in the habit of telling as many as possible about your startup. Whittle your way down to the elevator pitch. Alex and I have come a long way with our presentation even just in the last two weeks and these meetings have proven invaluable for that very reason, if nothing else.
- Product feedback: Instead of thinking that someone else just "doesn't see the vision" or that there's some missing piece of info that you could get someone to make them understand, you have to consider that your product vision sucks, or more likely, its jumbled with a lot of extra crap it doesn't need right now. In fact, your first response should be to look at what you're not getting, not what they're not getting. Being pushed on our product thinking will have the long term effect of making Path 101 that much better in the future.
- Don't burn bridges...hang around the rim. Go out and get your angels or cobble together what ever you can and just keep everyone posted. You can't get rebounds if you don't hang around the rim. Maybe the investor has too many things going on right now or maybe they just took some meetings that scared them off to your space. If you got in the door once and you weren't laughed out the door, don't waste any social capital you may have gained even by getting turned down. Sometimes investors come around again and you don't want to lose touch.
- There's always risk. Just because someone asks for more traction doesn't mean that you will have taken all the risk off the table by the time you see someone later on, after you've accomplished more. Companies still go under even after they've generated lots of revenue. To think that, "Oh, they just want all the risk off the table first", isn't really accurate.
- Most of all... it's not personal. Everyone in this space is trying to run a business. Shake it off and move forward. You'll get 'em next time.