I’m sorry, your baby’s ugly.
I don’t know how I missed this article by Mark Solon, but it made me laugh. It reminded me of the saying “No is the second best answer you can get.”
I always encourage my start up friends to pitch investors even if you don’t want their money because they’ll tell you all the holes in your plan. In the end your business plan will be stronger for it.
It’s not easy to tell people you won’t invest in their start-up
The problem with saying no as a venture capitalist is that there really isn’t anything to gain. You’re going to alienate someone who might have the next great idea and shut you out of a future round of financing. Worse yet, there’s the risk he or she won’t refer you to a friend running the next hot start-up. Finally, people generally don’t like others who criticize their work, and it’s a quick way to make a long list of antagonists.What I’ve learned over time is that entrepreneurs deserve (and appreciate) two things from us in how we communicate our decision: promptness and honesty. The worst thing we can possibly do is string someone along or make up a reason why we’re not investing.
Technorati Tags: VC, Start up, business plan, Mark Solon,
Mark wrote this? As an entrepreneur, I don’t mind being told no and getting honest feedback. It’s helpful, really, and expected. It helps if the VC doesn’t laugh while saying no, though.
C’mon Wyatt, lighten up. Your pro-forma was the funniest thing I’ve seen since Bill Murray was using his weedwacker as a two iron in Caddyshack
Cinderella story, here at Augusta. Still cracks me up…
Hope things are going great for you and the gang at Pronetos.
Mark
Wasn’t it a one iron?
(Or am I thinking of the old Lee Trevino joke?)
And I remember that pro forma… LOL [j/k Wyatt], but Mark… not to take this in a serious direction (not that Caddyshack isn’t important to Western Civilization) but..
What makes a pro forma less ugly for you? What are the cues that tell you that a financial projection is at least credible? Any little tricks of the trade?
Thanks in advance!
Norris,
Most importantly, I’m just having some fun with Wyatt. I have an enormous amount of respect for ANYONE willing to eschew the comforts and security of corporate life for true entrepreneurship and Boise would greatly benefit from more folks like the gang at Pronetos.
Having said that, remember, I absolutely did not laugh at their pro forma, merely pointed out that it was really unrealistic. That episode reinforced the importance of any start-up having experienced advisors who can mentor them in areas like this before presenting to any sophisticated investors, including angels.
As you know Norris, financial plans for true start-ups are SWAGS at best, but there needs to be some evidence that thoughtful analysis and rigor has been applied to forecasts based up real research, an understanding of the market, and the involvement of someone with experience bringing new products to that market and all of the difficulties in doing that.
Happy Easter Norris. Loving the brilliance of technology as I’m typing this from the passenger seat of our Suburban on the way to the Grand Canyon for some camping with the kids over Spring Break.
Thanks, Mark -and we all pick on Wyatt & Chris, LOL (just like they pick on us).
Yes, they’re SWAGS even for well-established firms. (Even on Wall Street, read the footnotes & assumptions, not the numbers, LOL.)
The one marker you mention - someone with experience - does ring true for any kind of forecast.
Hmm… I think I have a new blog entry - but for now, Happy Easter & safe travels. The Grand Canyon is amazing & if you can get to the north rim…
Cheers!