I have just posted a reply at https://cofounderslab.com/discuss/are-ndas-a-waste-of-time
and it got me thinking, who needs who most out of the investment community and entrepreneurs?
i will hold back my opinion just now. But as an entrepreneur i do sometimes wonder if we are undervalued and treated as the second class citizen in the big game. Why do we go to pitch to vc's. Why dont they come to pitch to us? Oh ok, maybe i have just given my view away ;-)
A typical VC examines hundreds of startups per year and invests barely in a handful of them. They may need startups in general, but they don't need any given startup, nor do they need to chase after startups - they got plenty of selection already. As long as startups outnumber investors by a large margin, the situation cannot be symmetrical.
Furthermore, investors don't really have to invest in startups - there are plenty of other investment possibilities, and safer ones too. So, startups compete not just with other startups, but with stocks and bond and commodities and such as well.
Given all that, I guess entrepreneurs do need investors more than the other way around.
That being said, I've seen investors, including VCs, going to networking events and conferences, meeting entrepreneurs, inviting entrepreneurs, and presenting themselves on stage. I think it qualifies as pitching.
If your startup is doing well, VCs will in fact come to you. VCs usually hold the power because startups want capital to grow their operations from nearly nothing, and massive traction isn't usually evident yet at that point. Thus you have to convince the VC, who is managing the money of institutional investors who are hoping to profit on startups, to take a bet on you.
What would be the purpose of a pitch by a VC?
I ask because the purpose of a pitch is to persuade someone to enter into a relationship by telling said someone something that they don't know. Do you really want to argue that entrepreneurs know less about VCs than VCs know about what an entrepreneur is doing?
That said, VCs and angels do "pitch" when they want a specific deal more than the entrepreneur does. (It's sort of like banks - it's easiest to get a loan if you don't need one.) VCs also "pitch" to groups of entrepreneurs all the time - what do you think they're doing when they talk at events? (They even have elevator pitches.)
However, expecting specific pitches from VCs as a typical case demonstrates a misunderstanding of supply and demand. (There may be more money than good deals but that ignores the problem of identifying good deals.) It's unclear how said demonstration reflects well on an entrepreneur....
"But what about need?" Need has little to do with it. Moreover, "investment money" need not be invested while many entrepreneurs don't have workable alternatives. (If you do, go with them - investment money is expensive.) Yes, there are exceptions as mentioned above, but if you're one of them, you're not in this discussion.
Andy, thanks but i fully appreciate the CURRENT supply and demand situation. What i am saying is (perhaps at a philosophical level) that it is wrong.
And it reflects a situation where entrepreneurs (as a mass, not perhaps individually) do not possess and project enough confidence in their unique abilities and in their ideas. When i keep reading these annoying posts saying "just learn to code" it shows an utter contempt for what real developers and techies do, and in most cases have trained to do over a longer period that most bankers.
I believe the playing field needs levelling and the supply/demand balance changing. Many financiers couldn't dream in a million years of some of what entrepreneurs and tech gurus do. Without entrepreneurs most financiers would have nothing to do with their money apart from earn a misely dividend on stocks and maybe buy an overpriced membership at some naff golf club in Florida on the off chance of sitting next to their perma-tanned President.
dimitry says "startups compete not just with other startups, but with stocks and bond and commodities and such as well.". Sorry mate but that surely has to be very wrong. Go on then Mr Money-Bags Financier, go and put your £10mil into stocks. Yes you may make a half decent % and annual dividend. But you will be bored rigid. And you know it!
financiers who get into backing entrepreneurs do it because they want to stand on the edge of the red carpet with the screen talent. And they want the big returns. not the piffling 6%. They want the big one. As per the great sitcom "Silicon Valley", they want to find THE entrepreneur that leads them towards the 3 comma club!
But equally, an entrepreneur with the next big idea can be made or broken by going with the right or wrong money and investment team. All partners and cofounders (and that includes the investment team) should be seen as equals, not play an arrogant game of "oh my part is more important than your part".
if you are looking for a CTO, and a potential one has his people call your people and ask you to show up at his offices across town to pitch to him. Would your response be 1) throw on the suit and tie, spend 2 weeks writing a pitch deck and rehearsing it and then go and tell him why you need him oh so badly. Or 2) call him to an interview and grill him about his experience and then ensure you do the same with at least 3 others. Or 3) meet for a coffee, flirt with each other about your dreams and goals, chat together about your experience. Then meet and chat several more times until that moment you click and think "yeah i could work with this guy and together we can change the world"
WHY SHOULD FINDING AN INVESTMENT PARTNER BE ANY DIFFERENT!?
It is time for entrepreneurs and tech gurus to get bolder and realise they are in demand. If anybody wants to join your vision, whether it is with skills or hard currency, then bring them ALL on as equals. Ensure they all contribute to the dream every single day, from the day you meet to that day you ring the bell at the New York stock exchange to announce your joint entry into the 3 comma club.
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