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Dear VCs: Kill the ‘warm’ introduction

71 点作者 mck-超过 10 年前

29 条评论

jblow超过 10 年前
Author has no concept of what it is like to take submissions to anything. As someone who is a member of an investment fund that gets way less attention than a top-tier VC, I&#x27;ll tell you what it is like to have open submissions:<p>Almost everything that comes through that channel is complete garbage. It has negative utility to read through that stuff because it makes you tired enough that you might actually miss something good if you see it anyway, and it predisposes you toward negativity regarding submissions (which is psychologically unhealthy both for your quality of life and your relationships with potential investees.)<p>Our hit rate from open submissions was 0.25%, that is, it took 400 submissions to get one company in which we would invest. And that company is one that likely would have come to us through a more-closed submissions process.<p>One of the most valuable things you can have as a business owner (startup or no) is an understanding of context. Know what the situation is like for the people you are dealing with. Know why they do things the way they do. This author has not built that experience&#x2F;skill. He is only seeing things from his viewpoint as someone who wants money. Guess what, this makes him isomorphic to every other random startup founder in which a VC is not going to invest.<p>Use common sense: VCs are financially motivated to find good companies to invest in! If they think something will give them an edge, they are going to try it. The fact that they don&#x27;t take open submissions should tell you something about the dynamics of the system. You should listen and understand what that something is, because that understanding is valuable.
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glifchits超过 10 年前
It bothers me when people try to tell businesses how to improve their operations, purely for personal benefit. The point of VC firms is not to fund your business, its for VCs to generate a return on investment. VCs surely know that by not reading all of the applications, they are missing potential winners. But they also know that getting strong introductions is a much much much more efficient way of finding potential winners.<p>It is not the system&#x27;s job to work for you, it is your job to play within the system.
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mbesto超过 10 年前
1. This isn&#x27;t feasible. A partner at CRI once told me they get 5,000 deals a year. It&#x27;s simply impossible to sift through even more than that.<p>2. If you&#x27;re spending your nights shipping code, then you can probably get users&#x2F;customers. If you can get users&#x2F;customers, getting warm intros is pretty easy. So much so, that VCs will come after you (see the WhatsApp&#x2F;Sequoia story)<p>3. I&#x27;ve struggled to get funding so I can empathize with the author (among his other various random rants) but this isn&#x27;t the right way to react to it.<p>4. VCs often say (at least in SV) their biggest mistakes are the &quot;investments they didn&#x27;t make&quot;. I know very few who said &quot;shucks, wish I woulda have gotten a warm intro from them&quot;.<p>The reality is pretty simple - show growth and you&#x27;ll get VC intros. If you spend your time complaining how the system is unfit for you, then building a venture-based tech company is probably not for you.
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paulsutter超过 10 年前
Your story would become compelling if you share your raw revenue growth graph and tell us what market you are in. Without these, your complaints sound like hollow whining. I mean this in the most constructive way possible. You could even do this without losing your anonymity.<p>Lacking that information, we have no data to judge the reasonableness of your complaint. All we have is the perspective of two experts, who both said &quot;Too early&quot; (translation, &quot;Zero interest. But do come back if your business does magically turn amazing&quot;).
brianstorms超过 10 年前
&quot;It is practically impossible for a talented, but unknown founder to get a meeting with a top VC.&quot;<p>Let&#x27;s break that into four buckets:<p>1. practically impossible 2. talented but unknown founder 3. get a meeting 4. top VC<p>Ok, so what&#x27;s the problem? By definition, top vc&#x27;s are going to be the most sought-after, and the ones who have the pick of the investment litter. So it&#x27;s going to be hard. Real hard. It&#x27;s going to be, you got it, <i>practically</i> impossible -- but not <i>completely</i> impossible.<p>If you&#x27;re such a talented founder, then one of your talents is knowing how to figure out how to get through. If you don&#x27;t have that talent then maybe you&#x27;re not as talented as you think? You can sometimes make up for it through sheer persistence -- I don&#x27;t mean by relentlessly calling the office of and sending Cuban cigars to Gordon Gekko. I mean subtle persistence. Find ways. That are clever. That show you&#x27;re talented. Securing venture capital is a hack like any other. Make it a clever hack. In my experience a &quot;warm intro&quot; helps but is not necessary. Deep research helps more. Almost all of it is out there on Google.<p>But I also wonder, why do you need a &quot;top VC&quot; in the first place? There are bunch of smaller VCs who are superb. If your product&#x2F;service is so great (read: traction, rave reviews), it will get on the radar of investors and media.<p>Earn your VC, and it won&#x27;t be practically impossible.
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joshu超过 10 年前
Build something interesting and they will come to you.<p>I get 10-15 pitches a day. Most are unworkable. I reply to about one a week.
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diego超过 10 年前
Man, you&#x27;re selling an investment to a VC. If a stock broker cold calls you to offer you an awesome deal, you hang up. Venture capitalists are just like you in that sense; they have a practically infinite number of investment options and a limited amount of time. They owe you absolutely nothing.
yesimahuman超过 10 年前
I think you give VCs too much credit for being good at being bad. In my experience it&#x27;s more that many VCs are just mediocre at their job, much like any other field. I think the great ones don&#x27;t really fall into some of these traps, but their associates and junior partners do.<p>As an example, I recently had a VC continuously email me for months which I ignored (mainly because I knew we weren&#x27;t a fit and didn&#x27;t want to waste either side&#x27;s time), only to set up a meeting and have them blow me off. I found it pretty funny.<p>The reality is there are a lot of companies on the radar for these firms, and it&#x27;s a lot of work to individually vet each one. They are only human, and I would just try not to take it personally and keep on kicking ass.<p>This is why it takes even great startups months to fundraise. All we hear about in the news are the rare super-hot startups which skew our perception of the fundraising game. The reality is fundraising sucks for most startups and you just described why (not that they can&#x27;t improve though).
philipjoubert超过 10 年前
It appears the author doesn&#x27;t realize that VCs are normal businesses trying to turn a profit. If there was a profitable opportunity to find &quot;99.99% of talented, unknown founders&quot; by accepting cold emails, then some VCs would start doing it.<p>I would guess the reason they don&#x27;t is because the authors assumption is wrong. If you&#x27;re a talented, driven founder with a growing startup then it&#x27;s not really that hard to get a meeting with a top tier VC.<p>The problem with accepting cold emails is the sheer volume. Unless there is a standard filtering process, partners will waste too much time with crappy startups.<p>A solution to this would be to create a standardized format (kind of like the YC application) which founders could submit to multiple VCs. Fortunately, AngelList is already busy solving this problem.
code4tee超过 10 年前
If the author wants people to be impressed there needs to be something to be impressed about. Build an actual product with actual value and actual adoption by the market (even just a smallish test pool) and people will talk to you. If it&#x27;s just an idea, well those are a dime a dozen.<p>VCs want to invest in real products. Does passing over a bazillion pitches about concepts mean they might pass up the next &#x27;big one&#x27;? Sure, and the VCs know this. Their job is not to find the next big one as much as it is to make a solid positive return for investors and the best way to do that is focus primarily on real products showing something to be impressed with.<p>The effort wasted on writing this ranty post could have been put towards doing something to impress the VCs and have them calling you. Just saying.
te_chris超过 10 年前
This feels like the definition of wishful thinking. If I, a nobody, tend to dismiss cold enquiries then why on earth would someone in high demand not?
zbowling超过 10 年前
VCs are not like your local bank with all the time and willingness to hear all the potential business plans and pitches that can be thrown at them. Also their system isn&#x27;t just spawned out of some kind of elitist mindset to keep you out of the in-crowd. Just keep working at it.
Ologn超过 10 年前
In 1996 I worked at a small Internet Service Provider. We were known for being one of the cheapest (if not the cheapest) ISP&#x27;s in New York City.<p>Back then if you wanted a machine on the network, you&#x27;d get a 10MB uplink to a T-3 (which was better speed than a lot of the other low-tiers). A port fee was $500 a month to be able to transfer 1 gig a month, up to $3000 to transfer 100 gigs a month. Then you&#x27;d have to lease a machine as well.<p>Nowadays, I can get a 125MB uplink on Linode, with 2000 gigs allowed a month - for $10 a month. No lease for a machine - the VPS comes with it for free - and is much faster, has more storage, memory etc. than anything I could have gotten for a reasonable price back then.<p>It costs next to nothing to put a product out nowadays. Google Play and the App Store. 100 million people want to download your app from Google Play? No worries - it&#x27;s hosted on their infrastructure.<p>Aside from that things like Github are around. There are open source libraries that do everything, and with foreign function interface you can use libraries from almost any language. A lot of your coding is done for you. A lot of what I do is hooking two libraries up together, put a UI on it, and then maybe a little bit of my own code. Voila, a product.<p>I have no idea why anyone who can code would feel dependent on investors.<p>Get in a hurry to where you, or you and your co-founder(s), are &quot;ramen profitable&quot;, and then devote yourself 100% to building up revenue and getting product&#x2F;market fit.<p>In high school, I used to have to sneak into the Columbia University engineering library to read the 1978 Bell System Technical Journal articles about how Unix worked. Now I can go down to my local bookstore and there is a shelf of books on it. I don&#x27;t even have to leave my home, I can get the information on my PC. Not even that - all the information I want to know about Unix is on my phone at any time I want - which runs Unix.<p>It&#x27;s like people are looking for someone to tell them &quot;no&quot;. Every day that passes by, it gets easier and easier to build a product that hundreds of thousands of people want. You don&#x27;t need a lot of capital, it&#x27;s practically free. You just need to know a little programming and get to it. Of course, the more programming you learn, the easier it will be.
anigbrowl超过 10 年前
<i>QQQ was featured on national TV. A junior partner at Firm #1, who happened to watch this feature, reached out to set up an ‘introductory’ meeting. Junior Partner #1 ended this introductory meeting by stating that QQQ was “interesting, but too early” for Firm #1. I was strongly encouraged to “keep Firm #1 in mind for (our) upcoming Series A.”</i><p>Having already been rejected by Firm #1 previously, perhaps you should have employed some strategy of your own at this point - display ambivalence about Junior Partner&#x27;s overtures and make Firm #1 chase <i>you</i> a bit instead of you chasing <i>them</i>. It&#x27;s a truism of human psychology that people feel more intense desire for what they can&#x27;t have. Another approach might have been to make it clear that QQQ was a time-limited opportunity and if Firm #1 was not inclined to invest, then the door would be closed to them, forever. Nothing personal or spiteful about it - just the filter that you use to put a cap on your time investment in any given lead.<p>As written, and notwithstanding some good points, this comes across as &#x27;I have ____ and ____ desirable qualities, so why can&#x27;t I find love?&#x27; And like love, if it&#x27;s obviously the #1 thing on your mind then that means you must be coming up short. That&#x27;s a problem because it&#x27;s difficult for potential prospects to get a sense of who you really are behind the neediness. So if you want investment capital, talk about your organic growth strategy or your vision for employee-owned cooperative, like firms X and Y that found success that way. If the VC wants to talk money than you talk product, if the VC wants to talk growth you tell them you&#x27;re very excited about the upside potential and then change the subject. Leave first. If you&#x27;re at dinner (which you should be) let the other person order dessert, then get coffee and the check for yourself. Either pick up the tab or let the VC insist, but beat a path out of there.
dm8超过 10 年前
I&#x27;m not a VC.<p>1. Not all startups&#x2F;business can be venture backed. Venture backed startups are expected to have 10x returns within 5-8 years of financing and swing for fences.<p>2. If you kill warm introductions then how are they going to do screening? There is so much noise that it&#x27;s humanely impossible for institutional investors find right kind of signal (i.e. venture backed businesses)<p>3. Financing is hard in every situation. Be it mortgage for your house or financing your startup.<p>4. If you build something successful and fits into the definition of venture backed business, they will come.<p>5. Accelerators YC&#x2F;Techstars&#x2F;Angelpad successfully hacked this warm introductions problem by inviting everyone to apply. These accelerators will make warm introductions for you.
lpolovets超过 10 年前
I&#x27;m a VC, although by no means a &quot;Top VC&quot;. (Well, not yet!) I fully agree with the spirit of the post, which is that getting a warm intro shouldn&#x27;t be <i>required</i> to talk to a VC. What I will say is that most cold emails are not very good. When they are, many VCs, including myself, will reply and meet with the founder and treat it like any other startup pitch. Just last week, I talked with 3 founders who contacted me with an intro.<p>Requiring a warm-intro is simply an easy way to filter our a bunch of noise. FWIW, I would say that ~50% of warm-intro pitches that I see are good, and maybe ~5% of cold pitches are of a similar quality. About 1&#x2F;3 of the pitches that I get come in cold.
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softdev12超过 10 年前
The author makes some really good points. It is incredibly hard to meet a well-connected VC if you, yourself are not well-connected. It&#x27;s the classic double bind.<p>However, the article seemed to imply that somehow the &quot;goal&quot; was raising money from a VC, instead of making a great product. There were tons of companies started before the VC industry even existed. Businesses can and should be self-sustaining - creating profit that can fund operations. Just because most tech companies nowadays are money losing for years, doesn&#x27;t mean this has to be the case. And if the company is profitable, it can exist without a warm introduction.
wmichael超过 10 年前
The replies to the letter are silly. NOBODY has done a conclusive study showing that &quot;warm&quot; introductions result in a better deal success ratio. Ageism is the same thing. Until just 2 weeks ago, nobody had done a study to refute the rampant and overt ageism- of course, now we all know that companies founded by folks in their 40&#x27;s and 50&#x27;s have a substantially greater chance of succeeding. So not only is the ageism wrong, it is not remotely &quot;best practices&quot;- something VC&#x27;s owe their investors. Neither is the &quot;warm&quot; introduction.
w1ntermute超过 10 年前
Regarding the lack of email contact info on VC sites, you can usually find ways around this. For example, the a16z contact page[0] has generic email addresses that probably just point to black holes. But a little bit of creative Googling will tell you that Marc Andreessen&#x27;s email address is pmarca@a16z.com. I couldn&#x27;t find Ben Horowitz&#x27;s or Chris Dixon&#x27;s, but based on their Twitter handles, I would guess they&#x27;re bhorowitz@a16z.com and cdixon@a16z.com, respectively.<p>0: <a href="http://a16z.com/contact/" rel="nofollow">http:&#x2F;&#x2F;a16z.com&#x2F;contact&#x2F;</a>
robryan超过 10 年前
I wonder how many deals that are already series A size opportunities are out there which have so far avoided the typical tech startup route of picking up seed funding&#x2F; advisors which will avoid any introduction issue?<p>It certainly is possible, such as bootstrapping to early profitability or taking some money from those outside of regular crowds. The question would be I guess is this group big enough that it would make sense for VCs to put people on to sift through the volume of pitches to find those companies?
kenrikm超过 10 年前
It&#x27;s pretty simple you need one of two things: Growth or Connections. I you don&#x27;t want to play the connections game then metrics talk.<p>Both don&#x27;t hurt.<p>As a note: this place (the valley) is small.. you run into people you know randomly and often. You&#x27;re not going to run into these people or meet people who can help you or that you can help (it goes both ways pay it forward) if you&#x27;re sitting in your home in Wisconsin or Florida or Oklahoma. Boots on the ground make it a reality.
jwilliams超过 10 年前
I think there is a pervasive culture that investment is a game that is almost completely separate from actually executing. Like the killer pitch deck wins the money. Or the best elevator pitch. Or most persistent founder.<p>There are a lot of stories that validate this, so I can see why. However, these kind of narratives are terribly distracting for a company. It&#x27;s trite stuff, but stick to the fundamentals.
staunch超过 10 年前
From <a href="https://twitter.com/sama/status/530880914708897793" rel="nofollow">https:&#x2F;&#x2F;twitter.com&#x2F;sama&#x2F;status&#x2F;530880914708897793</a><p>&gt; <i>whenever i hear VCs say &quot;we will only meet people with a referral&quot; i think &quot;more opportunity for YC!&quot;.</i>
chrisyeh超过 10 年前
VCs are your customer. You are trying to sell them your stock. Do retailers make their customers do all the work? Or do they serve up buying opportunities on a silver platter?<p>If you don&#x27;t put effort into selling, don&#x27;t act surprised when you don&#x27;t sell.
kumarski超过 10 年前
Ycombinator does a great job of abstracting investor emotional shtuff. At the same time, I think &#x27;signals&#x27; are bad.<p>For example, just because a founder is non-technical and ivy league, is no reason to fund them or meet with them. Seen it happen too many times.
fphhotchips超过 10 年前
Are you based in the US? Yes? Congratulations, you have access to a pool of investors practically unrivalled by any other country (or, at least, Australia). At least you have the opportunity to get warm introductions to them.
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api超过 10 年前
While he&#x27;s right, I imagine VCs get such an unbelievable volume of cold e-mail that sorting through it is really time consuming to the point of impossibility.
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azifali超过 10 年前
The silicon valley culture where every VC demands an introduction sucks. I concur.
graycat超过 10 年前
My short response would be:<p>How to Jerk the Chain of a Seed&#x2F;Early Stage Venture Partner.<p>Consider US <i>information technology</i> (IT) venture capital (VC): It is easy to understand that the author of the original post (OP) is frustrated, etc., but my guess is that with reasonably high probability can get a response from a seed&#x2F;early stage VC partner if (1) have a product&#x2F;service developed, about ready to get users&#x2F;customers and revenue, and that a VC partner can &quot;play with&quot; and (2) send the VC partner some e-mail with a short description of the project together with an easy way, say, just a URL, the VC partner can use to &quot;play with&quot; the product&#x2F;service.<p>Then the VC partner may evaluate the potential of the project by pretending that they are a user&#x2F;customer, that is, evaluate how well many users&#x2F;customers will like the product&#x2F;service. If the partner likes what they see, then more communications are reasonably likely.<p>For a little more, since most VC firms do publish their phone numbers on their Web sites, can call and, give name, say are an entrepreneur, and ask for &quot;office of&quot; a VC partner are interested in. Then may get a person, often a really sweet, young woman, and explain a little of the work and ask how can send e-mail. Often can send e-mail to the woman. Also, often, if call the VC firm after closing hours can leave a message on the phone of the VC partner.<p>Should, of course, check the interests of the VC partner to see if those interests do cover the project. And likely should pick a VC partner without very many current investments or board seats.<p>For a little more, once the results of a project have obtained some publicity and traction, VC partners may notice and call the entrepreneur.<p>The key in all this is just (1) above, that is, have the project that far along.<p>But, more generally, for such contacting a VC partner, my view is that an entrepreneur with a project about to get users&#x2F;customers should try hard not to accept equity funding and, instead, just continue to own 100% of the business. I explained more in<p><a href="https://news.ycombinator.com/item?id=8640126" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=8640126</a><p>Whatever VCs are doing, tough to expect them to change if they are getting good returns on investment (RoI), but as in<p><a href="http://www.avc.com/a_vc/2013/02/venture-capital-returns.html#disqus_thread" rel="nofollow">http:&#x2F;&#x2F;www.avc.com&#x2F;a_vc&#x2F;2013&#x2F;02&#x2F;venture-capital-returns.html...</a><p>actually on average VC RoI is poor.<p>My view is that US IT VC is missing out big time on much bigger RoI. The main reason is that VCs just will not fund the work before there is a product&#x2F;service ready to &quot;play with&quot;. Much of the reason here is that VCs can&#x27;t&#x2F;won&#x27;t evaluate plans for such work, and likely the main reason here is that they do not believe that such evaluations could be at all accurate in predicting financial success.<p>So, essentially all the work in IT the VCs see is what could be done by 1-3 guys in a garage before equity funding, and this situation is for high RoI just devastating. Moreover, about all the VCs can do when evaluating such projects is to look just superficially, at only the cover and not really the book, and the superficial look hurts evaluation accuracy and, thus, average RoI.<p>Part of the extreme tragedy of this situation is that quite broadly in our applications of the fields of science, technology, engineering, and mathematics (STEM), we know quite well, thank you, how to plan projects, present the plans just on paper, and evaluate the projects, just from the paper, with high accuracy, much higher than that of IT VC. Or, we can do such evaluations for the largest engine, ship, or airplane ever built, the tallest building or dam ever built, the longest bridge, tunnel, canal, or pipeline ever built, etc. Heck, the ancient Egyptians planned the pyramids, and we don&#x27;t see a lot of evidence of a lot of partially completed, failed pyramid projects.<p>Here&#x27;s an outline of something IT VCs could do that huge evidence from history clearly shows would yield much higher Roi; the outline is in steps (a)-(d):<p>(a) Problem.<p>Pick a good problem, one where the first good or a much better solution will be a <i>must have</i>, not just a <i>nice to have</i> for many users&#x2F;customers, so that in total, from number of users&#x2F;customers and revenue per each, can build a business worth $1+ billion.<p>Here is an example of such a problem: Find a safe, effective, cheap one pill cure for any cancer.<p>For this <i>must have</i>, there should be very little doubt; if there is much doubt, then pick another problem. In particular, we do not want to struggle over <i>product-market fit</i>.<p>(b) Solution.<p>For the needed solution, do some STEM research. We&#x27;re talking real research here, of quality that would qualify as a Ph.D. dissertation in a good research university, a paper in a good journal, maybe a grant from NSF, DARPA, etc. Yes, there is training for such research, the Ph.D. degree. Right, mostly here we&#x27;re talking a good research university STEM field Ph.D. prerequisite.<p>With the research, want to create some <i>proprietary intellectual property</i>, <i>secret sauce</i>, STEM technology difficult to duplicate or equal, that is the crucial, core of the solution and the business and, for competitors, a severe barrier to entry. Protect the work as a trade secret (with corresponding software securely locked up inside a server farm) or patents.<p>For this solution, there should be very little doubt that it is the first good or a much better solution to the problem. If can&#x27;t find such a solution, then return to (a) and pick another problem.<p>It should be possible to give a quite accurate evaluation of the solution and, thus, the project from the research for the solution presented just on paper.<p>(c) Software.<p>Since we&#x27;re considering IT, with Moore&#x27;s law, etc., to provide the product&#x2F;service to users&#x2F;customers, write the software for servers and user devices. Given the solution, the software should be routine.<p>(d) Launch.<p>Now we are sure we have the first good or a much better solution for a problem where such a solution is a must have.<p>Get publicity, users&#x2F;customers, revenue, earnings, and a company worth $1+ billion.<p>For (a)-(c) here, there are some great examples from medicine and US national security.<p>For the second, there was the SR-71: The problem was to do surveillance of the USSR. The intended solution was an airplane that could fly at 80,000+ feet, at 3.0+ Mach, for 2000+ miles without refueling. Kelly Johnson of the Lockheed Skunk Works showed up with an armload of papers showing the plan for the solution. The project was approved, and for years the SR-71s flew as designed.<p>Another example was Keyhole, basically a Hubble but before Hubble and aimed at the surface of the earth. Another example was GPS.<p>Technology? Nearly beyond belief. Value? World changing. Batting average? Very high, much higher than VC.<p>Gee, if the US DoD had wanted to sell the results of Hubble or GPS, wonder if they could have gotten any revenue? Are we talking <i>must have</i> here? How &#x27;bout that?<p>Of course, the work in (b) and (c) needs accurate evaluation, but the US is just awash in people that can do that in the best research universities, via editors of appropriate peer-reviewed journals, via problem sponsors in NSF and DARPA, etc.<p>After (a) and (b), it really is possible to know with quite high accuracy VC firms should look to fund projects just after success with these two steps.<p>That&#x27;s how to do (a)-(c) of projects. To be sure the launch in (d) works, do the work as outlined in (a)-(c).