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by lpolovets
3047 days ago
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I can't name specific companies because I don't want to violate their privacy. I will say that just in the last few weeks, I can think of one instance where I asked a few questions over email and the answers made me realize that a company wouldn't be a good fit (so they "wasted" time on the email but "saved" time from a 2nd meeting that would've led to a pass). And another instance where I asked a few questions and got really excited by the depth and clarity of the founder's answers. My fund is still talking to this second company, but I am even more excited about investing than before. I can empathize with founders at least somewhat because funds have to raise money too. Our first fund required 100+ investor meetings, took about 8-10 months to close, and consisted of a lot of small checks. So I do know what a slog fundraising can be, how frustrating investor signals and behavior can be, how hard it is to change someone's mind if they have a strong bias, etc. > So what you read as a simple e-mail response may realistically have been half a day of lost fundraising productivity, for, at best, a 10% chance they convert your gut-feeling "maybe" to a "yes." I hope it's not half a day =(. I do have a different framing of time spent though: if you can invest 30 minutes (or even half a day) into an email that has a 10% chance of converting a Maybe to a Yes, then that's very worth it. If you talk to 10 funds like mine that all write $750k checks, then spending 30 minutes x 10 funds to get a $750k commitment means your time is earning $150k/hour. Even if it's half a day instead of 30 minutes -- and I hope it's not -- that's ~$20k/hour. That's a great ROI when you might be trying to raise $1m or $3m. |
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Fundraising, for founders, is not a back-of-the-envelope ROI calculation. It’s purely founder psychology management. You’ve raised multiple funds from LPs and should be insanely proud of that fact. Kudos. I’m sure it’s one of the more, if not most, difficult things you’ve ever done.
However: you did that based on, correct me if I’m wrong, a pre-existing network and a safety net of wealth from previous exits as an employee. I’m not trying to “class shame”, that’s not wrong or bad and it doesn’t diminish you, your abilities, your insights or your fund, but founders’ predicaments are often very different and they have a lot more riding on the success of their startup. (Please - if I’m wrong, correct me! I’m not trying to be an ass here and I am making assumptions. I’m prepared to be very wrong.)
My guess is that Justin Kan’s fundraising style is an emergent result of his initial conditions (circumstances at first fundraise) and intuition, and that it’s designed to minimize psychological risk (harmful self-doubt, second-guessing) as much as it’s designed to optimize for a successful close, because the two are tied hand-in-hand.
My only conclusion is that it shouldn’t be dismissed based on anecdotal evidence from a VCs perspective without considering how wildly different founders’ perspectives can be. Again, probably no objective truth, just a whole ton of things to think about!