Given the main objective of my job as an Analyst is to source deals, I speak to literally more than a thousand companies a year. In some ways, this makes me and any other Analysts/Associates out there a great “front-line” barometer for the venture climate. Moreover, I'll venture that the reaction a General Partner gets from an entrepreneur will be a little rosier than the view someone like myself gets.
So when over the course of just a couple of weeks I get a reaction twice that I've gotten only once before, it gives me pause. The reaction?:
"Please don't take this the wrong way, but you are an 'Analyst.' If your firm was really interested in [MyCorp], a Partner would have contacted me. Meeting with non-Partners is just not a good use of my time." [This is verbatim.]
Is this reaction a telling commentary on the start-up friendly period we find ourselves in? Or should I just re-read Guy's VCAT and remember my place? ;)
From my perspective, there are several factors that perpetuate this mindset:
- We now have well established and easily accessible “waterholes” (i.e., the likes of TechCrunch). With one fell swoop, everyone knows about a company. The web, I would venture to say, is actually super-saturated with websites whose sole focus is to review web startups. There are literally dozens of blogs with TechCrunch-esque models. Hot consumer internet companies don't stay secrets (and uncompetitive deals) for long. Unsurprisingly, perhaps, consumer-internet VCs are increasingly bringing in EIRs to incubate web companies.
- Likewise, many companies seem to assume that once they’ve been mentioned in one of these blogs, all VC firms know of their existence. The lack of an immediate inbound call from a Managing Partners is tantamount to a lack of interest from the firm.
- It's not just with consumer internet deals. I can't tell you how many enterprise software companies I've called who tell me that they get daily calls from VCs. VCs overall are becoming more proactive when it comes to generating deal flow. This proactiveness has two flavors: either individuals in the firm becoming more proactive (including partners), or the firm adding a level of employees who are there to be proactive. Many firms have hybrids of these flavors, but it is rare to find a firm that has not adopted one stance or the other.
- Lastly, there is the same case of VCs needing to put their funds to work that I wrote about in one of my first posts, Contempt, eh?. Many of these VCs just can't afford to wait for the world to come to them when they have more money than they know what to do with. (Along these lines, really interesting discussion in the comments section of VentureBeat's post re: Ron Conway's mention of 'third-tier' VCs offering entrepreneurs a cash-bonus if they take their money worth checking out.)
But instead of thinking about an inbound call from a junior person as a waste of time, entrepreneurs should think of the call as a great opportunity to get the person's firm excited about their company. Junior people have the ear of the senior people in their firms - otherwise, they wouldn't be there. Entrepreneurs who realize this often have a powerpoint deck always updated and at hand, ready to email out or WebEx at a moment's notice. These entrepreneurs have figured out how to efficiently and effectively play the game. And when they are ready to go out and raise a round, my guess is that they'll have a long list of VCs (junior and senior) waiting to hear from them.