For most entrepreneurs landing the perfect investor can be a frustrating and painful process. For some like Guitar Hero founder Charles Huang, or Ben Silberrman the founder of Pinterest, investors wouldn't touch them with a ten foot pole. For others like Nest founder Matt Rogers, you have to beat investors away with a stick.
But how do you know if an investor lead has gone totally cold or if they're just really, really, really bad at responding? Well first you have to understand that it's never in the investor's interest to tell you no. No one likes to be on the losing end of an entrepreneur's story.
Bessemer Ventures bravely publishes the "Anti Portfolio" proudly displaying all the missed calls in their history. Famed angels like FLOODGATE passed on Airbnb and Zynga, while AngelList founder Naval Ravikant passed on investing in Pinterest (by the way almost everyone passed on Pinterest).
When an investor says "no" it's hard to forget. A few of my rejections triggered some of the deepest emotions I've ever had. But how do you know if the investors will be added to your own anti-portfolio? Ask yourself if one of these four things has happened.
1. Won't Say Yes But Won't Say No
The most common response from seasoned investors is to just say nothing at all. Like the guy that owes you money, they'll avoid giving you the tough yes or no answer at all costs. It's the easiest way to send a signal without burning a bridge. Eventually when you raise funding, the same investor will be able to blame you for not following up which led to him missing the investment and saying you were flawed. The great investors will give you a "no" quickly and let you move on. You won't like to hear it, but at least you can respect it.
2. "Lets See What Happens After Launch"
One of the easiest ways for a VC to hedge on investing is to wait until you launch. For almost every product this favors the investors. As Steve Blank says, "No product survives first contact with the customers." For everyday the investor waits the more customer data he can gather. Are you tracking towards acceptable norms for user traction or app downloads? If you launch to little or no fanfair, that same VC that seemed interested might turn completely cold.
3. "Lets meet Next Week"
This is a tough one but even worse than avoiding you. The investor signals that they want to meet with you but then make it impossible for you to actually schedule that meeting. They encourage you to follow up stressing that they want to meet but just can't at the moment, only to get the same response for 2-4 weeks in a row. This guy doesn't want to invest - he just wants to keep the options open while he closes up another deal.
4. They Push You To An Associate
Not to break the hearts of the junior venture capitalists that frequent StartupGrind.com, but this is just a cop out for most investors. The Partners make the decisions and without one you really have nothing. Granted, there have been some legendary junior partners that pushed for investments that led to massive firm returns. One of the most famous is Kevin Efrusy a partner at Accel who at the time as a junior member of the team found Facebook and pushed senior partner Jim Breyer and the firm to invest in the company. That led to a multi-billion dollar return for the firm. But most junior team members are....junior. If you meet with a low level guy push to move as quickly upstream as possible. If not you might never even get a chance to pitch.
---------------
You're an entrepreneur.
If you want something - go get it! No one is stopping you. And really the worst thing that could possibly happen is they just say "no." No's are easy to deal with. I'll take a "no" over a nonresponse any day. Practice on the investors you don't care so much about getting and be prepared to nail it for the ones you do and remember the best time to raise money is when you don't need the money.