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Entrepreneurs to VCs: Stop sharing my ideas! |
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Entrepreneurs to VCs: Stop sharing my ideas!
The anonymous entrepreneur behind VC-rating site TheFunded.com
put together a memo telling Sand Hill denizens how to "be a better VC."
In short, it's a list detailing the most common complaints users of his
site make about venture capitalists. We got our grubby little hands on
a leaked copy. The lessons? Entrepreneurs want a better communication,
firmer answers, and for VCs to want them for their companies, not their
business secrets. The biggest complaint? That VCs regularly leak
business plans and confidential documents to other startups, even
potential competitors. We ask: Is this really a new phenomenon? VCs are
typically exempt from non-disclosure agreements, something
entrepreneurs should always keep in mind. The threat of an idea leak
seems to be the price to pay for the pleasure of doing business with
Sand Hill Road. Is the shocking part that VCs "cross pollinate" the
competition using ideas swiped from pitching startups? Or that some
entrepreneurs are such dumbasses that they're surprised by it? After
the jump, TheFunded's full list of ways to be a better VC.
Be a Better VC, Courtesy of TheFunded.com
In May, 2007, TheFunded.com launched an area for CEO's to post "Open
Letters" to the venture community, telling venture capitalists what
they feel needs to change about the fundraising process. Four months
later, hundred of CEO's have voted on the letters, and there are five
lessons for VC's from the Members of TheFunded.com.
(1) It's OK to say "No."
There are hundreds of posts by frustrated CEO's who have been strung
along by venture firms unwilling to say "yes" and equally unwilling to
"no." Meanwhile, every post where an entrepreneur gets a quick "no"
tends to be positive. This should give the venture community a clear
message: end the infamous "Soft Maybe" once and for all. As one CEO
commented, tell the company what you don't like or what needs to
change, rather than playing an elongated game of wait and see.
--- http://www.thefunded.com/funds/item/858
(2) My materials are confidential, please!
The title says it all. Many frustrated CEO's from around the world are
very upset by personal experiences where they receive plans from
competitors or have their plans shared by venture capitalists. Some are
calling for NDA's to be signed before sensitive diligence is sent out
to venture capitalists as a practice and looking to "out" funds that
have done this on TheFunded.com. Some funds have already been called
out on the site for doing this, but some of the CEO Members are
concerned about being "black balled" for doing so.
--- http://www.thefunded.com/funds/item/1016
(3) Tell me something, anything!
One of the most common complaints across TheFunded.com is the long time
between pitch and follow-up. Seasoned entrepreneurs know that a
financing takes months to close, but getting an email or a call
follow-up to a pitch meeting should not take months or even weeks. As
one Member mentions, just write: "We didn't forget about you. We're
still discussing your venture." If it's going to take a couple weeks
for you to get back to entrepreneur, tell them in the meeting.
--- http://www.thefunded.com/funds/item/616
(4) A little manners goes a long way...
There are hundreds of posts about the poor treatment of entrepreneurs
in the pitching process, and it's time to change that. Imagine being on
an airplane to meet a fund later that day, and they cancel the meeting
and reject your deal in a two line email while you are in the air.
Imagine being handed off to a junior associate, going through a pitch,
and then the partners that you were supposed to meet with appear in
full golf gear and ask you start again from scratch. The stories of
poor treatment and lack of manners are too frequent.
--- http://www.thefunded.com/funds/item/1722
--- http://www.thefunded.com/funds/item/456
--- http://www.thefunded.com/funds/item/613
--- http://www.thefunded.com/funds/item/1370
(5) I am not a source of free research!
Numerous of posts complain that CEO's receive unsolicited calls by
associates at venture funds expressing "interest" in their companies
and wanting to learn more about the business. In many cases, the CEO's
realize that the fund is considering an investment in a competitor and
doing research. In other cases, funds are doing research on a market
where they have investments or are considering investments. None of
these calls ever lead to a deal, however, and the members agree that
this practice needs to stop. If you need to do research, tell the CEO
up-front and let them decide if they want to give you information. The
false pretenses of an investment need to go.
--- http://www.thefunded.com/funds/item/797
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