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Why You Don't Get Real Feedback from VCs--and a Solution

Submitted by admin on Tue, 2019/12/03 - 11:42am

If there’s any one thing I’ve focused on in my VC career, it’s trying to give real, actionable feedback to founders. I’ve made a bet that if a founder pitches me, whether or not I fund them, if I make the process worthwhile by telling them exactly why I couldn’t get there, they’re likely to recommend that other founders do the same.

The risk is that if I give a definitive “no”, then if they pivot, or figure out something else, or if they get more traction than I expect because I was flat out wrong, then I’ve closed the door on my opportunity to invest.

I’d rather do that and take that risk then give them wishy washy, meaningless feedback that blends in with all the other investors that do the same.

There are other reasons why the process of fundraising doesn’t provide good feedback, leaving founders frustrated and uncertain as to why they’re not getting more investor traction.

Time/Effort

As investors, we offer money as our product—and the demand for it is high. Our inboxes are full and it takes a lot of time to try to get back to everyone.

Part of what makes the process take longer is the format—you write a long story in pitch form and we’re supposed to write one back. It would be so much easier if investors could quickly get to what matters, and give them quick directional responses—yes to this market, no to this team, yes to this way of making money.

Weighting

A no is a no, and since most VCs try to sugar coat things a bit, everyone walks away feeling like they just missed getting a meeting or getting funded. You really have no objective way to determine how close you came.

Not only that, but whatever commentary or criticism we do give might not be commensurate with how good you are. Maybe I mentioned market size, but I could be grasping at straws for a near miss and that’s not actually a really big issue.

Relationship

I recently got pitched something that I wanted to say, “You’re a terrible person for thinking this is a good idea” but I didn’t want to start a fight with the founder nor have that founder go around badmouthing me in the community because of the feedback. However, that’s what I really think.

If I could have said it anonymously, I probably would have—and honestly, I think that’s what this founder needed to hear.

A VC’s interest in keeping relationships open sometimes flies counter to their desire to give honest feedback.

Comparability

It’s really hard to keep track of every investor’s response and lay them out side by side to figure out if you’re getting strong signals on particular aspects of the pitch. After dozens VC pitches, most founders don’t get feedback given to them in such a way that makes it easy to create a narrative as to what’s wrong.

A Solution?

About a year ago, Lauren Magnuson and I started looking at how to go about getting founders real feedback. We talked to a bunch of investors about what was important and to a bunch of founders as to what they were trying to get across.

We did this because we believe that if founders are going to invest their personal resources into a project—time, money, reputation—and take that big career risk, it should be easier for every founder to get honest and specific feedback from real venture capital investors.

We created Feedback.vc—a double blind system where a panel of investors review anonymized submissions along a structured format designed to give you feedback specific to crucial aspects of your business--product, market, economics, team, and raise. This way, you can find out what’s actually resonating with potential investors and also what needs work. Not only that, but investors can request to be connected with you directly if they like your anonymized submission.

If you’d like to be part of our first Beta cohort, you can use the code FOUNDER50 for a 50% discount.

Is this pay to pitch?

No. We don’t believe in charging for direct access to VC’s, and that’s not what we offer. What we have heard from founders time and again is that direct meetings with investors don’t always garner honest and consistent reactions. Anyone can pitch whoever they want, but not everyone gets the detailed, specific feedback they're looking for.

Why isn’t this free?

We would love to be able to offer this service at no cost to the community. As a small fund, we’re not able to sustain the costs in time and resources it takes to build and run the platform. We offer discounts to underserved communities, and we will be donating a portion of our proceeds to CodeNation—a nonprofit that equips under-resourced high school students with the skills and experiences that create access to careers in technology.

Who is this for?

This product is aimed at founders who want to set themselves up for a successful fundraise by getting honest feedback from real investors. You get a detailed review on several aspects of your business, so this isn’t for an idea you just had in the shower. And since our investor panels have a limited time capacity, we’ve designed this for companies who are at the stage of investing in the improvement of their business. Our aim is to make your raise more successful in orders of magnitude more than what you invested.

Read Complete Article Tuesday, December 3, 2019