20 Ways to Spot a Rookie VC

Aug 29, 2012

As an entrepreneur, you would think getting in front of an investor, VC, or perfecting your pitch would be the hard part about raising money.  Really, the hardest part is weeding through rookies, investors that fish, etc.  Luckily, with these 20 tips, you can spot these guys a mile away!  *The making of this article was crowdsourced tips & lessons from a select group of 500 entrepreneurs at Plan to Start.  We picked out the 20 most common*

1.  The VC doesn’t ask you how much money you are seeking.

2.  He doesn’t ask how you plan on spending the money.

3.  The VC doesn’t ask you how much money you have already raised, and from who (he should be trying to determine how many people he has to negotiate with).

4.  The VC doesn’t ask who else you’re talking to (lead investors are jealous birds, they want you all to themselves).

5.  An analyst from the VC firm calls you trying to get information (real VC’s will call you themselves if they’re that interested).

6.  If you can’t get to a yes or no.

7.  If the VC offers specific advice without knowing anything about your company.

8.  If he/she doesn’t ask any questions during a meeting.

9.  If they critique your summary/plan, and their suggestions are focused on the content, grammar, SPELLING MISTAKES, etc. RUN.  There is nothing more distracting in the world for a management team.

10.  If he hasn’t done a deal in 3+ years, that VC’s outta the game.

11.  If the VC doesn’t talk to you again after a Partner Meeting Monday, you’re done.

12.  The VC won’t stop talking about him/herself, how much money they make, etc.

13.  They don’t spend time getting to know you or your company.

14.  If you hear “you’re too early for us” (note: good VC’s might not fund you being too early, but they’ll keep in communication with you till you’re ready).

15.  If the VC just wants to be “chauffeured” (entrepreneur code for a VC who demands you go a certain direction, but doesn’t want to work; nor is aware of what goes into executing on that path).

16.  Beware the one who doesn’t take action when a portfolio company’s ceo asks for help.

17.  You give respect, but get no respect.

18.  You give time, but get no time in return.

19.  A VC tries to convince you to raise way more then you need (edit: founders do, however, underestimate costs on average by 32%, and time to get to market by over 200%.  Ask the investor WHY he thinks you need more.  It could be justified).

20.  And lastly, this one’s for our LADIES fundraising: the process for dog VC’s is as follows…

  • Meets for drinks, not morning coffee.
  • Drink one: “leans in” as he laughs.
  • Drink two: touches your arm as he laughs.
  • Then proceeds to try his luck (always first meeting).

Buy yourself a taser or zapper from a military surplus store (or ebay), and just zap him real quick “Zzztt.”  Doesn’t hurt them, just kind of gives them a little shock.  Problem solved.

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