Or maybe we have. Despite what your average venture capitalist will confess, many aspects in the world of venture capital are consistent over time. Some things change, but a lot of things stay the same.
Venture capital of old and venture capital of new still share the same DNA. And, over time, one thread remains exactly the same.
They'll never tell you "no" and will rarely tell you "yes."
Entrepreneurs looking to raise money haven't changed much either. When the VC doesn't explicitly say "no," it's interpreted as "probably yes." And unfortunately for the entrepreneur, "not no" usually means "probably never."
So how should you navigate these choppy waters?
Simple: Build a business that doesn't require venture capital. Only then will a "not no" turn into a "maybe," which might just turn into "yes."
This might seem like odd advice. "Ignore the remote possibility it'll happen." But that's exactly what I'm telling you. It goes like this:
- Forget your funding round.
- Build your business.
- Secure your funding round.
Building a good business these days is exactly what translates into a fundable company. VCs rarely fund ideas. Most require some market validation. Translation, "Will a real customer actually buy what you're selling."
Here's your guide for getting to getting there:
1. Focus on segments.
Focus is exactly what many bootstrapped companies need more of to mature. A segment can be any group of prospects that have something in common that creates uniqueness. It could be a vertical market, like healthcare or retail. It could be a geography, like North America or California. It could be a market size, like mid-market or enterprise.
Focusing on a specific segment means you can go deeper. You can dominate. Too many young companies try and sell their stuff to anyone. You can't be everything to everyone when you're checking your bank balance prior to payroll.
Pick a segment. Go deep instead of wide. Learn and develop a repeatable process to dominate the next five segments.
In my current gig, we've focused on the health and fitness segment for 2 years and found all of our our early lighthouse customers.
2. Capture "not quite ready" prospects for the future.
At your startup, you'll encounter lots of tire-kickers. Tire-kickers are prospects who might buy from you in the future, but aren't quite ready. With them, you'll lose more to no decision than you will to the competition. That's a good thing. As long as you have a system in place to capture these prospects for some nurturing.
Every campaign you run should have two goals:
- Close every prospect ready buy now.
- Capture contact information for as many prospects that aren't ready to buy now, but will be in the future.
Capture them in a leads database, or even a simple spreadsheet and nurture away. They will come around.
I sold three clients in the first quarter of 2017, but also collected over 1,000 email addresses. Sixteen of those leads have since turned into deals.
3. Create a VC hit list.
The number one complaint from VCs is that they see too many business plans that do not fit their area of focus. No matter what space you're in, there are a handful of VCs out there that focus on it.
VCs also like to focus on different funding stages like early rounds versus later stages. Do some research. Find the 20 or so firms that focus on your type of thing.
Start to develop relationships with them. Connect via Linkedin or "run into them" at an event. Follow companies they've funded.
Stalk them--in the most harmless sense of stalking, of course. These relationships will pay off when the real funding conversations start.
Back in the early 2000s, I nurtured a VC for over two years prior to his funding of one of my companies. You can do the same.
4. Realize that not getting funded is good.
You can not skip steps. You will get funded exactly when you're ready, not a moment sooner. You will get your first customer when you deserve it, not a moment sooner.
It's part of the process your new company has to grow through to mature. To hone your message. To build the right features. There are no shortcuts. None.
So if you haven't been funded yet, take a step back. Examine yourself. Own it. Where do you need to be to get there? The process is required. There is no substitute for the grind.
One way or another, 2018 should be big year. A huge year. Your Seed or Series A round might be right around the corner.
"Yes" does occasionally happen. But even if it doesn't, well, good.