Bryan Danielson

The hardest thing in VC isn't finding the next big thing. It's saying no to a founder. I was a founder once. I know what it's like to pour your whole life into a company until it becomes the very extension of who you are. Sadly, the no is inevitable in our line of work. But over the years I've learned how to be less bad at it: 1. "No" is not the cruelest word in venture. "Maybe" is. The slow fade. The "let's touch base in 6 months." These aren't kindness. They're just a way of keeping optionality at the founder's expense. Yes, sometimes an opportunity is genuinely too early. But you know the difference. If you know it's a no, say it. 2. Don't hide behind abstractions. A famous investor once counseled founders: "Believe the no and not the why." Investors usually don't want to open a Pandora's box of heated back-and-forth with founders, so they take refuge in vague cover: "it's too early," "we don't have enough experience in this space," "the market's not big enough," or the classic "it's just not a good fit for us." I've used every one of those. Now when I pass, I try to be direct about why I don't have conviction. But I'm also aware that in saying no, I may be describing the limits of my own imagination. So I explicitly say: this is my read...it's based on incomplete information and a highly subjective point of view. I may well be wrong in my assessment. 3. You're not saying no to a pitch deck. You're saying no to someone who probably hasn't slept in months. I'll be honest, there were times I'd glance at my phone during a pitch or quickly check email during a pitch. Not because I'd lost interest, but because something felt urgent and I was already juggling 100 things. It took me too long to understand that when an investor checks their phone, the only message a founder hears is: "this is not that interesting." I accepted the meeting. They've been at this for months or years. The least I can do is be fully there for an hour. 4. Founders remember how you made them feel. Forever. The company you pass on today may be run by someone who pivots and builds something extraordinary tomorrow. Or who becomes a founder you want to back in five years. Or who tells every other founder in their network exactly what kind of person you are. As in every other facet of life, reputation takes a lifetime to build and a minute to destroy. 5. If you're passing, try to be useful. Introduce them to an investor whose thesis actually fits or a corporate partner they've been trying to connect with. It costs you ten minutes. It saves them months. In summary, there is no way to make rejection painless, whether in one's personal or professional realms (startups are both and that makes it doubly bad). But there is a way to make it honest and dignified. To every founder I've said no to: I tried to do it right but I know I didn't always succeed. I also know some of you will prove me wrong and I genuinely look forward to that.

72

9 Comments

Most founders think they’re raising capital Most investors think they’re allocating capital But too often, both are walking toward the same trap Capital without discipline is a liability Capital without governance is fuel on dry grass The market right now is full of money sitting in poorly structured deals, mispriced risk and reactive boards. That’s how LP capital gets locked for a decade with no early liquidity and no control resulting in no control on the growth of investment! We have a different approach at Roundtable Ventures We don’t ask “Is this a good company?” We ask “Is this structured to survive? “How can we 10x this company?” “How can we help them scale? “ And pressure comes disguised as changing Markets, Founder misalignment and Competition. And as investors if you just deploy and don’t operate along side founders - you have set a clear path to failure! Because the real risk in venture isn’t volatility It’s unmanaged execution. LPs don’t lose money because founders lack vision. They lose money because no one tightened the governance early

20

3 Comments

You want to be a great VC without doing much VC shit? Get to know all of the best pre-seed and seed stage GP's out there and let them know that if they ever want to liquidate any of their positions that your a secondaries buyer. 1. You're now a go-to liquidity source that will be in high demand if you can do what you say you can do. 2. You'll never have to shop for deal flow. 3. You'll never have to compete for early allocations. 4. You'll never have to be "value add" unless you're into that sort of thing. 5. You'll most likely be buying into companies at a significant discount which means built in equity for you and your LPs. 6. The time to exit is now shorter as you're buying in later down the road. This strategy isn't for everyone, but it's one to consider if you want to get into VC without having to go the hard route... Also, not saying that this way is easier per say, but it kind of is when you break it down.

1

1 Comment