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K1 Capital Advisors

 

$$$$$ El Segundo , US West

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4.1

Andreessen Horowitz

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$$$$$ Menlo Park, US West

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3.8 4.5 4.0 3.8 4.2

4.0

Rincon Venture Partners

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$$$$$ Santa Barbara, CA, US West

Rated by 43

3.6 3.8 4.2 4.2 3.8

3.9

True Ventures

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$$$$$ Palo Alto, US West

Rated by 11

3.9 4.2 3.2 3.6 4.0

3.8

Mangrove Capital Partners

Certified

$$$$$ Luxembourg, Europe

Rated by 45

3.8 4.1 3.3 3.7 4.0

3.8

RRE Ventures

Certified

$$$$$ New York, US East

Rated by 107

4.7 3.8 3.7 3.1 3.6

3.8

Sequoia Capital

Certified

$$$$$ Menlo Park, US West

Rated by 33

3.9 3.8 3.8 3.4 4.1

3.8

Altos Ventures

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$$$$$ Menlo Park, US West

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4.0 4.1 4.0 2.8 4.1

3.8

406 Ventures

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$$$$$ Boston, US East

Rated by 64

3.9 3.8 3.8 3.4 3.9

3.7

First Round Capital

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$$$$$ San Francisco, US West

Rated by 23

3.6 3.5 4.0 3.6 3.9

3.7

DFJ Mercury

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$$$$$ Houston, US Central

Rated by 27

3.8 3.6 3.8 3.8 3.6

3.7

FLOODGATE

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$$$$$ Palo Alto, US West

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3.7

IDG Ventures SF

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$$$$$ San Francisco, US West

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3.6

Flywheel Ventures

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$$$$$ Santa Fe, US West

Rated by 19

3.7 3.6 3.8 3.5 3.5

3.6

August Capital

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$$$$$ Menlo Park, US West

Rated by 10

4.0 3.8 3.9 2.8 3.7

3.6

Updata Partners

 

$$$$$ Red Bank, US East

Rated by 64

3.8 3.5 3.4 3.5 3.9

3.6

Trinity Ventures

Certified

$$$$$ Menlo Park, US West

Rated by 15

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3.5

Merus

 

$$$$$ US West

Rated by 21

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Wellington Partners

Certified

$$$$$ Munich, Europe

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3.2 3.6 3.4 3.0 4.2

3.5

DN Capital

 

$$$$$ London, Europe

Rated by 30

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Clearstone Venture Partners

Certified

$$$$$ Santa Monica, US West

Rated by 28

3.7 3.0 3.0 4.0 3.3

3.4

The Founders Fund

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$$$$$ San Francisco, US West

Rated by 49

3.7 3.4 3.1 3.4 3.2

3.4

Menlo Ventures

 

$$$$$ Menlo Park, US West

Rated by 16

3.9 3.7 2.9 2.9 3.6

3.4

Versant Ventures

 

$$$$$ Menlo Park, US West

Rated by 10

3.6 3.4 3.9 2.7 3.3

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DFJ Esprit

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$$$$$ London, Europe

Rated by 13

3.0 3.8 3.5 3.2 3.4

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Fidelity Growth Partners Europe

Certified

$$$$$ London, Europe

Rated by 16

3.9 3.6 3.1 2.9 3.5

3.4

GRP Partners

Certified

$$$$$ Los Angeles, US West

Rated by 61

3.8 3.3 3.0 3.5 3.4

3.4

New Enterprise Associates

Certified

$$$$$ Menlo Park, US West

Rated by 17

3.5 3.4 3.4 3.5 3.2

3.4

Scale Venture Partners

Certified

$$$$$ Foster City, US West

Rated by 18

3.2 3.4 3.3 3.0 3.6

3.3

Blumberg Capital

Certified

$$$$$ San Francisco, US West

Rated by 39

3.4 3.4 2.9 3.4 3.5

3.3

Polaris Venture Partners

 

$$$$$ Waltham, US East

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It is one of the single greatest things in fundraising to get a quick "no" from an investor. The prolonged "maybe" is a far worse alternative. Yet, after receiving a quick "no," most CEOs tend to either (1) argue their point ad nauseam or (2) disappear without a trace. Both of these are the wrong course of action.

Before going into what to do, there is such a thing as getting a "no" too quickly. If you 10 minutes into your presentation and an investor says "no," then there is a bigger problem. The problem is probably with your pitch itself, as any investor would not even book a meeting unless there was some basic interest in the idea. In the case of a "no" that comes too quickly, it is really important to try and learn what you did wrong by asking a lot of questions, such as "could you understand me clearly," "was my presentation bad," "did you understand the market opportunity," "did you understand the offering," etc.

For the cases where the quick "no" comes after a couple email exchanges, a call, and maybe a meeting, the best outcome is to:

(1) get some advice on how to improve the presentation / business,
(2) ask for advice on other investors to speak with, and
(3) secure a time to get back in touch and report on progress.

Keep in mind that there is no such thing as a permanent "no" in venture capital, so you always want to leave the door open. Arguing your points or walking away cold will close the potential for future engagement with an investor. When you get the "no," send an email like the following:

"Thank you for taking the time to learn about XYZ Company. We would appreciate any quick thoughts on how to improve our pitch.

We are going to continue executing against our plan over the next couple of months. Let me know if you would like an update on our progress. Also, do you know of any other investors that might be interested in our space" I hope that we will have an opportunity to work together in the future."

Over the years, I have heard many VCs say that "the market is not large enough" in the first or second meeting. New entrepreneurs should know that this means "no."

Pocket edition of "Theoretical Future Market Values through 2020 - 3rd Edition" does not exist, nor is there a team of analysts at a VC firm inventing new markets to value. From the way that some VCs can confidently look you in the eye and say that "the market is too small" after fingering your PowerPoint, you would think that they have flipped to page 128 of the market reference guide while pecking away on the Blackberry.

The reality is (a) you have likely done a bad job explaining the market size in your pitch and (b) there is not a lot of anecdotal data for the VC to make an off-the-cuff mental estimate. When you pitch your business, you must reference concrete market data points, the best examples of which are recent liquidity events, that a VC can understand quickly. Read on...