Serial Entrepreneur and Venture Capitalist Guy Kawasaki came up with a list of lies investors tell to string along entrepreneurs (keep them hanging) in case something miraculous happens to make them look better. To rescue entrepreneurs from the heartburn and pain of wasted time below is the list of the lies investors tell and Guy Kawasaki who himself is one of them explains what it means.
- “I liked your company, but my partners didn’t.” – in other words “NO”
- “We are patient investors who want to help you build a great company.” - in other words “NO”
- “If you get a lead, we’ll invest too.” - in other words “NO”
- “There are no companies in our portfolio that conflict with what you’re doing.” - in other words “NO”
- “Show us some traction, and we’ll invest.” - in other words “NO”
- “We love to co-invest with other firms.” - in other words “NO”
- “We’re investing in your team.” – in other words “We’re investing in your team as long as things are going well, but if they go bad we will fire your ass because no one is indispensable.”
- “We have lots of bandwidth to dedicate to your company.” - he’s already on ten boards. Counting board meetings, an entrepreneur should assume that a venture capitalist will spend between five to ten hours a month on a company.
- “This is a plain, vanilla termsheet.” - There is no such thing as a vanilla term sheet. Hire a legal expert to write/understand the termsheet. Termsheet Elements Explained
- “We will get other companies in our portfolio to work with you.” - Frankly, he might be hated by the other company. The worst thing in the world may be a referral from him.
- “We like early-stage investing.” – venture capitalists wants to invest in proven teams with proven technology in a proven market (eg., ecommerce).
Recent article on NextBigWhat expressed the same frustration about the entrepreneurs not getting a straightforward No and a quick NO from investors. In fact, you are extremely lucky if the rejection time is short enough for you to plan your next move (10 Funding Options).