The VC Product Is Broken for 99 Percent of Founders

Imagine showing up for a job interview late, without doing any research on the company, or even looking up the

Imagine showing up for a job interview late, without doing any research on the company, or even looking up the people you were meeting on LinkedIn or Twitter….do you think you’d get the job?

No way, right?

And yet….VC’s do this all the time.

I think the pre-investment product, the VC product most entrepreneurs experience, is broken and there is a market opportunity to fix it. This hunch started 8 years ago, when I was trying to raise money for my fitness gaming business. I experienced the VC product as a consumer. It was not a delightful experience, to say the least. I will never forget feeling like an unwelcome salesman rather than a potential partner. The pain of meetings that started 10 minutes late and the smile and nod routine as the excuses and apologies ate up another 5 minutes of my pitch. Once we got started, the recognition that I was starting cold as my initial intro was followed by the blank stares and blackberry distractions. The withering moment, after laying heart and soul on the table for 30-45 minutes through disinterest, distraction and doubt, when they say, “We’ll discuss and get back to you…” and you both know they never will.

At the time I thought I was talking to the wrong people, but now, having been in this market for a few years, I hear about this buy-side mentality all the time from founders who have experienced the industry standard pre-investment product.

At the end of the day, investors are service providers. But the accepted buy-side vs. sell-side power dynamics of the initial VC-entrepreneur meetings let us get away with minimal preparation, if any. Investors frequently approach first meetings with extremely limited knowledge of who they are meeting, or what they are meeting about. And, to date, industry norms support (or certainly don’t penalize) investors who are late to meetings, and then spend the remaining time distracted by their phone/e-mail.

To be clear, I’m not innocent here, but that doesn’t mean I can’t say it should stop.

As an occasional perpetrator of this buy-side behavior, I know it can feel more efficient for investors to operate this way, forcing “cold-start” meetings by pushing the work onto the other side of the table. But I believe this buy-side mentality and lack of up-front preparation on the part of the investor wastes time and is inefficient for both sides – a little preparation can move the conversation in a first meeting deep into what is typically accomplished in two meetings. Up front work can also identify hurdles that cannot be over come and save everyone the effort.

I have spent my career on the sell-side. From trash talk t’s, shorts and shoes to video games, and I believe if you deliver a product, you are selling. Now I am delivering a product as an investor and I am iterating my way towards the Damn Factor I can deliver to the market. I am not there yet, but wanted to share the feedback mechanism I am testing on my way to finding product-market fit with my “first meetings.”

First meetings would be much more valuable for everyone involved if investors adopted a sell-side mindset and did these five things:

  • Be on time
  • Understand the background of the team and read the materials that have been sent prior to the meeting
  • Spend some time on the website or using the service if it is live
  • Have a few questions or key concerns prepared to guide the meeting
  • Be focused and engaged throughout the meeting

Chris Dixon of Founders Collective points out that the most impressive pitch meetings he’s seen involve entrepreneurs that have used his products, and come with solid feedback for his product. (see point 6, bullet #2 here) I think it should go both ways. If an investor doesn’t show up with solid feedback at the first meeting…your eyebrow should be raised.

To validate or dis-prove my assumptions about the brokenness of this product, and my proposed solutions, I have started sending out a survey to every entrepreneur I meet with.

It provides an efficient and anonymous way to give me feedback and helps me continue to improve. I’ll publish results in the coming weeks as the data set gets bigger but so far the feedback has been really helpful – especially the criticism.

For now, if we meet and I’m not on time, prepared and focused, I hope you will let me know in person and in your response to the survey.

This is a post from Phin Barnes, a Principle at First Round Capital in New York. It first appeared on his blog, Sneakerhead VC. The VC Product Is Broken for 99 Percent of Founders