Q: How does a first pitch to a VC end?

A: With a “No” or “$$$!”

(and everything in between)

I’ve had a few entrepreneurs ask me how quickly we decide to move forward working with a company. Do we huddle up after every meeting to discuss? Do we check companies off on the Monday meeting? Is it more of an individual thing or a group process? (More on that later.) Essentially, all of these questions drive at understanding what happens after that 30-60 min. first meeting.

There are a range of options. I’ve bucketed them into a few categories based on my experience, ranging from worst (lowest likelihood for an investment) to best (expect the term sheet this month). In most cases, whoever you’re meeting will identify next steps during the meeting. If they don’t, you should ask.

“No.”

Full stop. Comes when your company is not within our focus (product, industry, market, technology, stage – too late, geography, etc.) or we may have invested in a competitor.

When you receive this answer, you should figure out why. If it’s cut and dry, for example, you’re a biotech company pitching a software VC, move on and focus on investors that are a better fit. If there is something else the investors are seeing, for example, a broken business model, try to flush it out. Its very low risk (the VC has already said no) and you may be able to identify other risks, learn about new opportunities, intros to other investors, and so forth.

“No, but just for now.”

This is a legitimate answer if you are either too early for the VC or you are not fundraising at the time of the conversation.

You can tell if the VC is interested if they ask for your investor updates (mildly interested), that you reconnect when you begin fundraising (more interested), or to put an update meeting on the calendar in 3-6 months, even if you’re not planning a raise (really interested).

Make sure to follow up on these actions. The more data points you have on how the VC acts, and the VC has on how you perform, the better.

“Let me get back to you after we discuss on Monday.”

Some say this is a cop out for not being able to say “no” in person. In other cases, the person you’re meeting with just might not be sure what the next step should be. For example, if I’m meet with a marketing company am just not sure of how interesting their product is, I’m going to consult with one of the partners that knows the ins-and-outs of marketing tech. If he’s interested, we’ll set up another meeting to get him up to speed. If he’s not, I’ll take his word for it.

The problem with this response is that, as an entrepreneur, you probably don’t exactly know where you stand. The upside is that you should only wait a week for a clear answer.

“Are you free next week?”

Great outcome. This means the VC would like to give more of their team the opportunity to meet with you and hear your story.

The (small) downside? Another 30-60 min. that could end with any of the options already outlined.

Tip for the next meeting: if there are new people in attendance, start from the top, but accelerate the pace. It’s likely that they’ve been briefed or read notes from the first meeting, but no one tells your story like you do.

And… very rarely… “We’re in.”

Note: this never comes from an associate and never with companies later than seed stage.

In it’s most basic form…

Aside from everything else that’s going on in that first pitch meeting, you’re trying to figure out where you stand so you can minimize the time you spend on VCs that aren’t going to invest and maximize your potential with the VCs that may. If it’s going to be a “no,” get there quickly, but try to get the most value out of the interaction – be it introductions, feedback, or advice. Then, follow up, keep folks updated, and see if those “maybes” can be nurtured into “yeses.”

What else should VCs be doing to make the process less painful, more transparent? 

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