Startup Syntax: VC Feedback
Investor Liaison Hannah Savage talks "why VC feedback may be overrated"
Why
A common questions from founders after getting a “no” for funding is: “Why?”
Spending weeks or months perfecting your pitch, refining your deck, and pouring energy into an application, only to get a pass with seemingly little to no detailed or specific VC feedback may feel frustrating.
Yet, in some cases, VCs not providing detailed or personalized feedback to applicants may be intentional and actually rooted in well-meaning.
Subjective
Each investor has their own perspective, thesis, and biases, to name a few factors of difference. Just because one VC passes, it doesn’t mean others will. A “no” or “not right now” from one VC may be a “yes” from another VC that sees the world entirely differently. Not to mention, if a VC isn’t investing, why does the VC inherently have the right to dictate or disturb the direction of the business and its founding team by providing personalized, but nevertheless subjective feedback.
Market
Some may say the best feedback isn’t VC feedback after all. The best feedback is market feedback. Market driven metrics like customer count, overall traction, and revenue (i.e., ARR, MRR, NRR, etc.) are the real feedback worth paying attention to. The investors that actually invest versus merely “window shop” may be the relatively few VC that offer constructive commentary since they money at stake.
Skeptically
Some investors may give feedback simply for the sake of saying something that seems virtuous. Some may go so far as to tell you to change the business model, switch up your pricing, or pivot your entire strategy after a single meeting. Yet, sadly those same VC who freely doled out feedback may not even remember you or your company after giving a “thanks, but no thanks” to the deal. Perhaps take feedback more skeptically when:
The investor doesn’t really invest in your industry or stage
The investor requests changes that contradicts customers
The investor seems to be justifying the “no”
Seriously
While some VC feedback may be worth exactly what you paid for it (i.e., $0), other VC feedback may not be noise. Perhaps take feedback more seriously when:
Multiple investors point out the same issue (i.e., there’s a pattern)
The investor has deep experience or expertise in your space and backs it with data
The feedback aligns with concerns you already had, but couldn’t yet articulate
They haven’t said “no” yet and are looking to continue the conversation
Lessons
Don’t quit. A pass from one investor may mean little to nothing in the grand scheme of things. There are perhaps many more options out there in the “sea” of VC.
Focus on traction. Proven success with customers and revenue ultimately outweighs theoretical VC feedback with or without investment.
Seek investors that align. Aligned investors will lean in and work with you to build the business together and root feedback in capital commitments. Please remember, while rejection is part of the VC process, don’t dwell on the “no”. Onward. Upward.
Apply
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