Ouch! That's what entrepreneurs say every time they're told no by a VC. Now comes word that it's no fun on the other side of the table either. Saying no to aspiring entrepreneurs sometimes makes you feel like crap, according to venture capitalist and Sevin Rosen Fund partner Nick Sturiale.
(Wait, should I feel sympathy for a guy who made an early-stage investment in XenSource, which was bought in August by Citrix Systems for half a billion dollars?) Read on and decide.
In the third of our columns on the inner workings of Planet VC, as told in the words of those who work the surface of that Machiavellian world, Sturiale told us about vetting deals, taking meetings and delivering the hook:
"If a deal is referred by someone we know, that's a big screen for us. Nine out of ten deals that come over the transom, they’re not worth taking a meeting on."
As we walked down a street in sunny Palo Alto, Calif., across the Camino Real from Stanford University, Sturiale explained how funding someone means initiating a relationship with them. That means you better be real sure what you're getting into before you dive in. You've got to be able to trust someone you're about to hand a seven-figure check to, right?
Vator.tv: If you do take a meeting, how do you say no?
“You have to say it over and over and over -- you get tired of it. Doing a deal is like getting married. You do the first date, and you’ll say you liked it and that you’ll call back, then a week goes by and you feel crap because you haven’t. They’ll call you up and say they want another date, but you don’t (because the idea is not worth funding). There’s no easy way of saying that, but we have to.”
The above echoes what we heard from Roland Van der Meer, of ComVentures, in last week's Planet VC column. Read that post here.
For those thinking about pitching him at Sevin Rosen, Sturiale told us that right now he is looking to fund software startups with low-friction sales models that can get into the enterprise through the back door. Read that post here.
Sturiale, who is a former executive of multiple enterprise software companies and has been a VC for seven years, then offered his best guess as to how the VC industry as a whole handles the process of saying no.
“There’s a lot of self-deception among VCs about it. They’ll say they’re good at it, but 9 out of 10 entrepreneurs who deal with them will say they were a jerk.”
Lastly, Sturiale introduced us to a new phrase, the "courtesy-proof" firm.
“Some VCs are better at it (saying no) than others." Still others are “courtesy-proof,” he said, which I took to mean that they can dismiss entrepreneurs with no courtesy and still have good deals come to them.
Sturiale smiled when he said this, without saying which category applied to himself or his firm.
Entrepreneurs who have an opinion on this column should post a public comment on it. If you want to do it anonymously, contact me via Vator, and we'll talk.