Thanks, but I will pass

How many hours have entrepreneurs wasted with investors who ultimately pass? I would love to see the data.

I have heard countless stories from founders who have been in conversations with investors for hours and hours with tons of diligence only to be turned down. Did the founder see this coming? Generally not because they so want to believe. Was the investor honest about the reality of them investing in the opportunity? Probably not.

I understand how the process works depending if the round is a Series A or a Series C. There are so many people raising money for their companies, and there is so much money in the venture world. There is also a lot of the same concepts being repeated, and VC’s tend to move forward after seeing a sector fail.

There is a reason I love to see companies become profitable early on. Although it is not as easy to grow quickly when there is not a big number in the bank but you also want to be in business with an investor who supports your vision. You have more control when you are profitable.

Entrepreneurs should take the opportunity to also say to an investor, “Thanks, but I will pass”. Think about that. Only a few times have I seen that happen and there is something so gratifying about seeing an entrepreneur who is struggling, working 24/7 with their head down to turn the tables on the countless investors who spend too much time tossing darts into the wind only to pass on the entrepreneur who spent hours with them when they could have been spending time on their business.

I don’t know the answer but it reminds me of a story that happened a long time ago. I went to visit my brother in college and on his dresser were a handful of small ripped pieces of paper with phone numbers on them. I knew exactly what they were. I said to him “are these numbers of women you have met at parties and at the end of the night took their phone numbers and never called them back”? Of course the answer was yes. I told him to stop it. It isn’t right and it isn’t fair. These women are hoping that after you saw them that the following week you are going to call. You are much better off ending the night with, “hey, it was great talking with you, I hope I see you around.”

The night was fun, the diligence was short and you move on. Maybe more investors could work like that?