When a VC turns you down

Earlier today I had one of those unpleasant moments with this VC gig. The personal attack.

That is when you turn down an entrepreneur and that person goes “chucky”. Fortunately it doesn’t happen much. In my experience it happens maybe 1-2x a year.

I try to keep a thick skin about it. I know that the founder is just super passionate and is frustrated. For some reason I end up saving those emails when I should probably just trash it.

But that experience made me think about the broader issue. Namely, the response when a VC turns you down. Because statistically, VCs are turning down people a bazillion times more than the amount of times we say “yes – let’s go!”

As a former entrepreneur and now a VC, here are some thoughts I’d like to share about getting turned down.

1 – Don’t go on a personal jihad no matter what. Even if you feel you were mistreated I wouldn’t go on the personal attack. At the very least, sleep on it first – you may regret it. But in the end it’s bad for everyone and just not worth it. I would encourage you to give feedback to that VC. This is a two way street. Keep it constructive and helpful.

2 – Many times VCs get it wrong. Plain and simple.

Quick story: we invested in a company called thePlatform based in Seattle. Several firms passed on that investment and we decided to invest anyway. We loved the team, technology and strategy. Less than a year after our investment, the company was sold to Comcast and it worked out great for us.

We have also had the opposite happen. We pass on a company and then it turns out to be a winner (happened more than once unfortunately).

And of course, we invest in some companies that may not work out -unfortunate but part of the risks of startup investing.

3 – Don’t give up. Because of issue #2 above (ie VCs get it wrong) you can’t give up. You gotta kiss a lot of frogs, meet a lot of firms & people and find a match. If you believe in what you are doing then you shouldn’t shrug your shoulders and kick the can.

Yet another story: I met with an entrepreneur friend of mine last week who told me, “I know if I change and have our company go in a different market, I can get funding but I won’t be happy about it”. My response, “startups are hard already. don’t change it to a company you don’t like. you won’t be good at that and you will hate it”. i firmly believe that.

4 – Don’t give up on that particular VC. Sometimes you just hit it off with an entrepreneur or with a VC.

There have been times where I like the entpreneur much better than I like his/her idea. I know they have something absolutely fucking brilliant in their mind & heart that just hasn’t come out yet. In that case, we shouldn’t give up. We should stay in touch and try to figure it out. Let’s not fund the wrong thing, let’s figure out the right thing to work on. Venture capital can be expensive source of cash but your time is even more important.

Perfect example of the “don’t give up on that particular VC rule”:

A few weeks ago, Avner Ronen (who is the ceo/founder of Boxee) presented at our annual shareholder meeting. In his presentation he mentioned that we turned him down 3 times before we made our investment. Now that isn’t typical but I’m so happy that we both hung in there together while Avner & Boxee refined their strategy & product.

5. Listen to the feedback and figure it out. If you are getting 100% of the same feedback from VCs, your advisors and your friends then you gotta pay attention to that. Take a breath and be intellectually honest. Am I working on the right thing?

6 – Stay cool. It’s really not the end of the world. I promise.

The question of the moment is now, no longer: Is torture un-American? It is: Are we, as a nation, bigger than our transgressions? Can we establish a commission or an investigation with a moral force greater than the trust that has been debased? Can we face up to what has been done in our name, establish accountability and find a way to atone and change?

Looking for a job? Be helpful.

There is no doubt that we are in a tough market. Lots of people have lost their job and many others are facing the risk & reality of losing their job. That sucks on so many levels.

Like many VCs, I am getting a ton of resumes and inbound interest for a variety of our portfolio companies that are hiring right now. I am doing my best to read them all.

The best way to stand out is to be helpful.

Be helpful to yourself and to your persective employer.

Bring thoughtful ideas to the table on how you could help the company or product. Tell us what you could do that is beyond the specific role if you want. Or tell us why you love the product. Or what’s broken. Do your homework.

I really don’t want to know what you did 20 years ago. I don’t want links to other people’s ideas. I want to know what you want to do, why you want to do it and how we will all be better off because of it. And I want to know what you are like personally to make sure the fit will work. Show me your work, your product, your blog, your tweets.

The same is true when we were hiring at our venture firm last year. When we were talking to Mo, he told us exactly what he thought about our companies and investing approach. He told us what startups he loves. What entpreneurs he respects. How he could help. What he would work on. He showed us a bunch of deals even before he officially joined Spark.

That’s the way to do it.