The Other Side of Transparency
At JLA, we try to stay out there, be at events, make the case, press the flesh, etc. Sometimes this leads to, shall we say, misaligned expectations.
Here is a shortened and cleaned up transcript of an email exchange I've concluded:
Them: My idea is [.....], please let me know where I come to pick up the check. Do I need to fill out any paperwork?
Me: We have a bit of a process that we use in order to determine if your investment is something we'd want to add to our portfolio. Please go to my blog at this location to learn about our process. While you are reading that, can I get just a rough idea (email response is fine) of the market size for this, what you will charge and how much you can make over the next several years? Just a rough idea.
Them: My partner thinks we should be conservative with VC people so we think that we will make 3 million dollars a year in the fifth year. The rest of us think he is crazy and believe 4 can be done if we get the 11 million dollars of financing it will take to build the factory.
Me: I appreciate the numbers. As you might know from my blog and our web site we don't actually invest in these types of things, we are more focused on [insert rick's blather]. My guess is there is probably some government programs (Sorry, Estelle) that might be interested because of your belief in creating 150 new jobs. But, unfortunately, this isn't something we would do.
Them: I don't get it. You are a VC. You have money to invest. Your doing investments and we need money. According to the investing laws, I'd think you'd want to do this.
Them (in mail right after the above): You've mentioned a blog several times. What is that?
We had a nice phone call to clear all this up. No Harm, No Foul.
Love the bit about the check and forms to sign. Classic.
Seems like more and more VCs are moving up in terms of the deals and companies they fund. Where would you suggest someone with an idea and a dream goes for seed these days? Who are the angels that you like to see/work with? Do you guys do early early early stage? You ask if a company is generating revenue in the process, if it's not is this a walk away point for JLA? Sorry for the mini essay ;-)
Posted by: Farhan Lalji | March 26, 2008 at 10:20
"You've mentioned a blog several times. What is that?"
LOL.
Posted by: Mike W. | March 26, 2008 at 11:10
Do people really think it is this easy? Thanks for sharing the other side. Every time I think everyone knows about a certain business "norm" I come across someone who has no clue. I guess that is why pointing people to your blog is the best approach - no need to reinvent the wheel every time via email lessons.
Posted by: Eric Friedman | March 26, 2008 at 15:14
"My idea is . Please let me know where we can pick up the check"
haha that's the first thing they said that really made me laugh hard. brilliant. characters these people..
Posted by: Roland Eck | March 26, 2008 at 20:08
i can't believe this.
Posted by: heri | March 27, 2008 at 00:16
Thanks for the link. I would have never have found that old blog post.
Posted by: Keith Glover | March 27, 2008 at 04:56
Hilarious story. Thanks for sharing. Now I know that if I ever find myself making a VC pitch, I will not be making the worst pitch ever.
Posted by: David | March 27, 2008 at 23:04