5 Reasons VCs Aren’t Founder Friendly Investors
There are many reasons it’s hard to find founder friendly investors. Many VCs advertise they’re founder friendly investors. Many founders would say that investors suck! That VCs are vampires. I contend that the general population of the world consists of a ratio of 7 great people to 3 pond-scum-sucking pigs. I’d also contend that that ratio holds true for investors and for entrepreneurs.
So why do investors have such a bad reputation with entrepreneurs? Why is it so hard to find truly founder friendly investors? My guess would be that many founders are focused on their own needs and unrealistic expectations instead of the needs of the investor.
Ultimately a founder’s definition of a non founder friendly investor is any investor who won’t give him money.
To that end, I’ve compiled a list of things that might make good investors seem bad…. or more accurately why founders think good investors suck.
Mistakes Founders Make That Make Founder Friendly Investors Unfriendly
- Presenting an idea as a company – no prototype, no team, no personal investment, no traction equals no deal.
- Having no idea how to approach a VC – I’ve seen a founder corner a VC who was leaving a meeting. This VC had sat through company pitches, had socialized with the founders that interested him and was on his way to his next appointment. There was a reason he didn’t stop to talk to this founder. Now there’s a reason he won’t ever answer his calls. Oh, and if you send an unsolicited business plan to an investor…. it goes where it deserves to go…. In the trash.
- Waste an investor’s time – Spray and pray presentations where founders pitch every detail of the company way down into the weeds. Present at a high level, get the investors’ attention and let the investor ask the questions when they want to drill down into the weeds. I can’t tell you how many times some idiot has approached me to raise money from me even though I don’t make investments anymore and goes right into of their demo that I don’t want to see.
- Approaching the wrong investor – Most investors don’t invest in every stage, industry and region. Many founders don’t do the research to ensure they are pitching someone that invests in their space. As an example, I clearly stated in Angel List and my web page that I only invest in B2B in the DC region and “don’t call me, I’ll find you.” Now I’ve added I don’t make new investments. Yet I get out-of-region pitches for consumer apps every week. I’m a founder unfriendly investor for many reasons and one of them is I ignore people who don’t know how to get to me, which is let me get to you and I don’t make investments.
- …. And the number 1 reason investors suck…. Your Baby is Ugly – Too many founders are as attached to their company as a proud parent is to their baby. Sorry, but there’s a good chance that the Pretty Baby Company of yours is horribly disfigured when viewed through non-parental, investor eyes. Often an investor telling you your idea sucks is taken as a personal affront. Yet it should be taken as a kindness.