Ninety percent of VC decisions boil down to one simple truth: "no" is reversible but "yes" is not. I'll explain why you've been left hanging by that investor...
If a VC tells you they aren't going to invest today, they can change their mind tomorrow and send you a term sheet.
Every day they don't invest is another day's worth of information. Maybe a competitor eats your lunch. Maybe you get arrested. Aren't they smart for not investing!
On the other hand, once they've wired a check, that's it. No takesies backsies. AI destroys your business tomorrow? Too bad for them; money's commited.
❓ So the core question is: why would a VC ever choose to invest?
Simple: they must believe that today's "no" isn't reversible.
They have to believe someone else will take their spot if they wait.
Straight up, it's FOMO.
There are three ways to generate FOMO:
1️⃣ Team
2️⃣ Traction
3️⃣ Term sheets
➡️ The former SVP of AI at Meta could raise $50M from Sequoia to sell yogurt.
➡️ When you've grown from 0 to $5M in 12 months, A16Z will throw money at you.
➡️ Otherwise, your only hope is pitting VCs against each other.
When you speak to an investor and follow up a few weeks later, they always ask the same question: "how's the raise going?"
🙅🏻♂️ Here's a secret. There's is almost no good answer to this question. Even saying "it's going great" is a horrible answer.
👍 The only good response is "I'm calling you to let you know we have a term sheet and wanted to know if you were in."
Anything else tells the VC there is no urgency and they can wait as long as they want to make a decision.
You can't raise serially. You need to prequalify investors and then squeeze your pitches into a two-week process.
This is how you pit VCs against one another.
This is the way.
🚨 Reach out to me if you're interested in learning more. I love talking about this stuff.