The Ether and the Scrum

Every day I get emails from entrepreneurs that make me think.  In this case, it’s from a friend who is on the fundraising trail.  He started off the email with “I felt compelled to share this with you as someone who would appreciate it.”  I thought it was dynamite and asked him if I could share it since – in its unedited form – it captured so nicely what I expect many entrepreneurs feel. And, just as importantly, it’s something I hope VC’s realize that entrepreneurs – even very experienced ones – feel.

I am fortunate to have successfully raised venture capital from top tier investors before. 

I have been a failed and successful CEO and know the difference.

I have earned my CEO stripes by being a successful operator in startups and big organizations.

I can lead, problem solve and think strategically.  I am technically adept, I can sell.  I work hard.

Yet, as I set out to raise money, I still have a great feeling of unease of the result.  I guess I have humility as well.

I’ve noticed, or maybe more accurately, I’ve become aware of the ether that is between a venture investor and entrepreneur.  In the ether, all things that can make or break a deal exist: idea, market risk, technical risk, team competence, economy, deal flow, competition, VC mood that day, entrepreneur pitch that day, first impression, gut feel, blog post for or against the idea read that morning, breakfast/no-breakfast, bias for or against, smarts or not-so-smarts of the VC and entrepreneur.

In my pitch experience, VCs I have been convinced hated me and my company after my pitch have invested.  VCs I am sure as shit loved me and my company after my pitch blew me off.  I have also been right that VCs I thought hated me and my company told me they in fact did; and, those who loved me and my company did in fact invest.  It’s been a crap shoot at best. 

Assuming there is something of merit in the idea, market, team and company, somewhere in the ether is a term sheet and a kick to the curb.  Coalescing just the right combination of elements in the ether at the right time has proven to be more art than science.  Anti-portfolios highlight how successful companies didn’t get it coalesced with one investor but did with another.

If I get it right and a financing comes together for my new company, I hope to have learned something that tips the scales of randomness in the scrum.

  • That's a great email. Thanks for sharing.

    I am an experienced entrepreneur in the middle of the scrum myself (in fact I'm in discussions with Ryan & Seth at your firm, among others). The truth of start-up life is that it is a constant battle, there are ecstatic highs and vicious lows. I like VCs who don't try to smooth it all over, but recognize the reality of that battle. In particular, I love the creed of Quest VP ; it recognizes that so much of the determinant of success is the entrepreneur's fortitude in the battle.

    As an entrepreneur, you have to embrace the battle and love it. It's the only way to live. It's great to hear about it from another entrepreneur's prespective. To whomever it is: good luck!!!

    • Kyle

      Start up life about the furthest thing from a 'battle' I can think of, I've seen more convincing battles fought in a bathtub with rubber duckies.

  • Now imagine this is the first time you set out to raise capital. So it wasn't Halloween that frightened me? Living beyond the scrum! Thanks for the insight.

  • A great perspective on the erratic and varied nature of humans. People lie. People change their mind. Some people try to test you. Some how things come together.

    The Art of being an Entrepreneur is another aspect that comes out in these words. Being analytical in business gets harped upon. It has its place. But when it comes to getting things done, particularly on the entrepreneurial road, I tend to find more Art. (This comes from an MIT Engineer by the way.)

    I also always appreciate Anti-Portfolios. I found Bessemer Ventures's to be particularly amusing.

  • It's like dating in college. One night you go out and every hot chick is all over you and your like, "I'm the man". The next week, your buddies dog won't even take a milkbone from you.

    I completely agree it is more art than science, and their are no guarantees when subjectivity and money play together.

  • A failed entrepreneur is in much better position to guide the budding entrepreneurs.

  • Mohan

    Passion is the only thing that sees you through this kind of uncertainty.

  • JDC

    Good post – i see it as a communication challenge. Each pitch is a learning experience – narrowing down the randomness of VC response is an art, yes (because humans are hard to read) but clearly persistence and the systematic assessment of your messaging is a counter-weight to success being just 'art'.

    The other point is that 'thinking someone loves you' or for that matter hates you, is the origin of much of the emotional roller-coaster. A mentor once told me: "a little introspection is healthy, too much is self indulgence" – and that was in grad school…

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