The fast route to a partner meeting is a route to a NO

There is a dynamic that we’ve observed time and again: VCs get “very excited” about the company, pull the founders into the process, go fast, have a partner meeting, and then say NO.

This is very painful and unexpected for the founders.

After all, the investor seemed to be so excited about the company, said nothing but positive things, had no major concerns, basically promised the term sheet, discussed doing the deal on great terms… so how come we ended up with a NO!?

Here are some of the dynamics that founders need to be aware of.

1. Founders have happy ears

We’ve written about this notion before – founders hear what they want to hear. Many times, when a founder has showed me an email from a potential investor, I have interpreted it differently from the founder.

Investors are a little bit like politicians – very skilled with words. They know how to get founders excited, they know what to say to them. On the other hand, founders tend to just hear positive things and think that every investor wants to invest. The reality is just the opposite.

Almost no VCs will end up investing.

2. Founders aren’t prepared to fundraise

The number one gotcha, and the reason for not raising, is being unprepared.

If you are pulled into a fundraising process, that means you aren’t fundraising on your turf, and aren’t fundraising on your timeline.

A typical example is VCs get excited, and go fast with the founders, then ask them to present at a partner meeting. Founders show up without a deck, or even worse, with a half-baked deck.

What follows is a NO. Why? Because the founders haven’t thought through critical aspects of the business. What is your customer acquisition strategy? What is your CAC and LTV? What is your addressable market? What milestones will you achieve with the next round of funding?

These are the basic things that all VCs expect you to answer, and think through. If you are pulled into fundraising you are running a huge risk of being unprepared, and have a virtual guarantee of getting a NO in the partner meeting.


This seems so annoying and unfair. Why do VCs do this? Why do they pull founders into the process knowing well that the founders aren’t ready? In a word – FOMO.

The VC industry is a FOMO industry.

We’ve heard more than enough about magical unicorns. The reality is that the returns of most VC funds are driven by one breakout company. Imagine being a partner who missed out on that one winner. Imagine missing Google, Uber, or Facebook.

VCs don’t want to miss deals. They would rather see you sooner rather than later, and pass quickly instead of not being able to get into a deal because they were too late.

4. VCs have quotas too

This may be shocking and surprising, but it shouldn’t be. Firms need to see a certain volume of the deals. Even if the fund is out of money, even if the partners are at full capacity, they will still meet with founder.

This is why it is always the best practice to ask a partner you are dealing with if they actually can invest in you now. If you ask, they won’t lie. If you don’t they may not bring it up.

5. The fast route into a partner meeting is a route to a NO

VCs are quick to engage and run to the finish line, but they are typically not fast to give you a term sheet. If they get back to you quickly after a partner meeting, more often than not it is a NO.

The fast route to a partner meeting is a route to a NO.

Seems unfair, right? Well, it might be or it might not be.

A typical VC firm writes one or two checks a month, if that, and they just can’t make their final decisions lightly.

What you really want to hear from the firm is that your deal is moving along and the firm is doing the work. Doing the work means that the VC is doing the research on the space, understanding the competitive landscape, understanding the addressable market, barriers to entry – i.e. preparing to do the deal.

Doing the work is a pre-cursor to a term sheet. No work is a precursor to a NO.

No VC firm can give you a term sheet for any meaningful amount, say over 500K, without doing the work. If they did, they would fail to do their job, and would let down their LPs (limited partners, or investors who invested into investors).

It is really painful for the founders to go fast with a VC and end up with a no. And it is particularly painful if you aren’t understanding the rules of the game you are playing. But if you take the time to think it through, it becomes simpler and more obvious.

Avoid making the mistake of rushing into the partner meeting. Prepare, think things through, engage quickly, but not too quickly, and go in confidently.

Come out with a YES and leave the NO for others who didn’t read this post.

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