Nivi · February 2nd, 2010
“You have to understand that you are not competing with an abstract notion of what a good investment is. You are competing with the other teams that saw the investor that week.”
This is why investors often don’t have good reasons why they’re passing. Maybe your company is good, but the competition is simply better. It’s really hard to understand this until 20 companies pitch you in one week. Simeon continues,
“To an investor, it costs about the same in terms of time to make a big or a small investment. Given the same risk/return expectations, they’d prefer the large investment most of the time.”
Topics Pitching
Is there any benefit in getting in front of the investor early in the week, so that your great idea is seen before your competition’s?
I don’t know. It probably doesn’t matter. Maybe you want to get in early in the week so they have time to do some work on your company before they make a list of the startups they’re considering at the end of the week. Maybe you want to come in late in the week so they remember you when they make the list. Maybe someone has the answer. My gut feeling is that there is no answer.
I agree with Nivi. At the same time, I am curious if there is any basis to the notion that “a week” as in M-F means anything. My guess is the investor hears as many pitches over any number of days or weeks as is necessary to find the next deal.
Regarding the preference for large investments, unless the company is willing to give up more equity for the larger amount, this is largely a consequence of VCs managing other peoples’ money.
But “easy come, easy go.” The same VCs that are eager to hand over millions early are likely the VCs that will push for an early exit later.
I’ve found that I’m most often competing with the risk profiles of the guys second in command. What’s the saying, “Nobody every got fired for buying IBM.” I think the same is true for Principals trying to make Partner and Associates trying to become Principals. It takes a pretty smart #2 to see enough of the potential to convince a partner, but too many #2s are trying to avoid making mistakes. When the partner says “Hmm…I don’t know,” it’s so easy for the #2 to say, “Ahh, you’re probably right,” for self-preservation purposes.