I keep getting emails from VC firms at regular intervals. I have had initial phone calls with many of them. But invariably there is no progress as we just do not act on raising money on our own because I fundamentally cannot get myself to pitch my business to a VC just to raise money. The reason is that I am uncomfortable doing a business plan on how I will scale the company. Because until we try something out we will never know whether it is going to work or not. It is always continuous experiments you run and figure out ways to grow and scale. I am kind of tired trying to be polite and diplomatic with VCs, i.e. responding to their emails and taking their first call and then not taking any initiative in raising money. Couple of days ago when someone was persistent about having a call after I turned down a request for a call, I sent the following response. I want to post that response publicly and I am going to point all VCs who contact me to this post from now on.
“I don’t want to sound arrogant. It is not lack of time. I am pretty jobless trying to figure out ways to scale our company trying various new things. The problem is the serious lack of interest in pitching my company to investors. I have spoken to so many VCs on the phone. It’s always the same. I refuse to do a business plan projecting how we can scale. It is like an experiment we are running and it is against my personal nature to pitch my plans to investors – just to raise money – as something that will work without fail. VCs don’t understand my perspective and I can’t blame them as they have to justify their investments to their LPs. I cannot change my nature and personality just to raise money. If anyone is interested in my company I prefer a one on one meeting. But I insist that I will not give a business plan nor I will pitch my company to raise money. The investment has to come because they instinctively trust me and have a somewhat religious belief that I will at least give their money back if not grow it by 10 times. That is the understanding with which our angel investors have invested in us, by the way. One of them is a VC and he thinks personally he has no problem with my style but as a VC he cannot convince his other partners. My yard stick for success is different from the pure professional investors.”
RT @VembuHome: On Vembu & VC Investment http://blogs.vembu.com/2010/02/on-vembu-…
RT @VembuHome: On Vembu & VC Investment http://blogs.vembu.com/2010/02/on-vembu-…
You are absolutely RIGHT and doing the correct things. Its amazing how Investors want all your business plans and models and they dont give anything in return, its all promises.
You should NEVER give your business plan away because, hey thats your plan…
An investor ones told me that allot of VC companies are not interested at all on putting money in some companies but they just are focused on getting as much business plans and projects as they can, sometimes they hit a good one, and NO they usually dont give the money to you, they start their own deal with your plan and people they trust. Remember Ebay and allot of other companies? Where people cannot imagine how many ideas where ripped off and stoled their business plans with fake promises. Be very AWARE for this so called VCs
If they want your business plan and they are approaching you, then they should give some type of guarantee. Creating a supposed VC investment company is a good way for a global incubator of ideas. They just raise plans and ideas, and almost never handle any money out. If they want money they should work themselves off, not ripping other peoples ideas.
Most investors are a bunch of lousy people that thing they are to important give away their money. Any idiot can have allot of money, but make it grow is another story.
ROktere,
I don’t know what you describe happens or not. Even if it happens I will not worry about it. Ideas are dime a dozen. Business plans on excel and power points are not even worth the paper it is printed on. It finally boils down to execution, evolving and adapting the idea and the plan to the rapidly changing market reality. I am actually not complaining about pitching to VCs and they in turn taking my ideas and implementing it elsewhere. I believe that is rare and I do not think anyone will run a VC firm with that as their main model.
My point is that everyone knows that plans on paper are only plans and only when you get out there and experiment you will come up with what works for your business, I am sick of this trying to position ourselves to impress someone that too a VC. The only thing I want to focus on is to impress our customers and partners by improving our product and customer service. Everything else will take care of itself and eventually we will succeed in a big way.
Sekar
my two cents,
I guess every mature VC understands that business plans definitely change once you start executing them. And no (mature VC) will hold you hostage when the plan changes or fails. But the lack of a plan will surely scare a lot of them.
Plus, when you pen down a plan you can visit it every quarter to see what failed and what worked :)
Jaspreet
Jaspreet,
I Agree with you. But all I am saying is that I am like this and I do not want to change my style. So if you like it let us talk or else I do not want to waste your time. Hope you understand that perspective.
Sekar.
Mr.Sekhar,
Interesting read and what you have pointed out is infact the natural evolution of business.
Part of the IT business in the Industry has become pretty much like how the agriculture today has succumbed to the use of fertilizers and pesticides and now that farmers understand that the intrinsic value of their lands are eroded by such uses. More than the VC and business related aspects cited , I liked your thoughts and such thoughts and initiatives are needed more in this world.
Prabhu