TheFunded.com Open Letter
Posted by Garfield on 2012-07-21
Dear V.C.'s -
I am only speaking to Silicon Valley today. First, let's start with your track record: whatever you're doing, IT ISN'T WORKING! What's your average return over the last 10 years? How many articles and blogs detail your failing at really picking winners? So whatever you're doing today is not really hitting home runs. That said...
INNOVATION COMES FROM ALL OVER THE COUNTRY! It isn't just in Silicon Valley! This is an incestuous area, where you all want to hear a big name or some big initial investor. So much for "venture capital" investing in "seed stage, high risk, high reward" ventures. Whatever - show me a fund that actually does that.
I am a nobody from the middle of the country. I had an idea and worked for 3 years on it (still am). I have solved the problem I set out to solve, and it is big and it is national. When Walmart agrees, YOU SHOULD AT LEAST LISTEN TO ME! How sad it is that you want to hear all the ideas, be in on what's going on, sit on your high horse, and laugh at us for trying.
Here is a perfect analogy my fellow entrepreneurs will understand: It's like I'm in a marathon. I filled out the paperwork, trained, pulled a support team together, and I'm about halfway through and AHEAD OF EVERYONE. Then I meet you and say "I need a sponsor to finish this race and win."
Then you say "Hmmm...have you ever run a marathon before? Have you ever won one like (Jack Dorsey, Mark Zuckerberg, Brad Feld, blah blah blah)? Has your team ever supported a winner before? Do you know how to run across the finish line? Here...let me see your stats....and look at your team....and check your shoes and the car you drove to the race....."
I stand there in disbelief. I say "uh, I'm IN the race. And I'm winning. And my team helped get me this far. And, uh, I could win this with some help."
Then you come back: "Hmm....well, we agree you're ahead. And we agree you could win this. But I haven't heard of you before. And I haven't heard of anyone from your team. And you're too old. And you don't live here where the cool people live. And you don't have 100,000 users on your site or $5M in revenue (we call that "traction"). I like what you've done, and you should be commended for getting this far (which they'll follow with some BS story about how they understand and were once where you are now), but I just don't think this is the right team. You may be ahead now, but I just don't think you can sustain the pace. I think you'll make a left turn when you shouldn't, I think your team won't be able to keep up, and frankly, I'D FEEL BETTER INVESTING IN LAST YEARS WINNER EVEN THOUGH THEY KNOW NOTHING ABOUT THIS KIND OF RACE, LET ALONE SPENT THE LAST 3 YEARS RUNNING IN IT!"
Mr. VC investor reading this: Get real. How many success stories have there been where people like me get pissed off, tell you to go to hell, and build the business anyway? Ohhhhh....THEN you want in....THEN it looks like a good business you would invest in.
So stop saying your're seed stage. Bullshit. Stop saying that you don't make your decision based just on the team. Bullshit. Stop saying that you were once where I am now. Bullshit. I call bullshit on your entire industry - you've become an inbred trigger-shy self congratulating group of people that live to watch us squirm and treat us like crap. Like taking phone calls or texting WHILE WE'RE PITCHING YOU.
I do have a good idea. And I'm going to go sell it myself. I'm going to go get that 'traction' you want to see. And guess what? When I do, F### YOU. I'll build this in spite of you and your ilk. You can't think for yourself. You have rules and guidelines and formula's and a profile you want me to fit before you invest in me. Guess what? That's fair for later stage investors. But you people that say you invest in seed and early stage? Guess what? STARTUPS ARE SLOPPY! I've taken this idea and I've got Walmart saying they like it and VP's in the industry agree and the trends are all pointing to this. EVEN YOU SAY IT'S A GOOD BUSINESS AND WE'VE BROUGHT IT A LONG WAY.
So what are you shy about? How can you say we've done a good job, we've got it figured out, then spit on and insult me by telling my I'm not good enough to fund to continue on with it? That my team isn't strong enough to move it forward? We've taken it this far - what is your problem? I get that it's your money. BUT STOP WASTING MY TIME MAKING ME DO A SHOW AND TELL FOR YOU WHILE YOU PRETEND YOU'RE INTERESTED IN EARLY STAGE. I'd be better off taking that $1,000 I spent to fly out to see you and go talk to Walmart or Target and put this together myself.
So why don't I do that myself then? Because growth costs money! Because I'm coming to you to help me hit an artery! Because when the retailer says yes, I'm screwed and won't be able to execute because I'm not funded (..oh, but then I could come running to you to get funded only to get screwed because I'm excited and desperate and you know it). Because I'll open the door to competitors as soon as I have some succes. Because running a business (even close to) right takes time and money. Because my team can't keep working for free. Because my wife is wearing the same bra as 3 years ago and barely can pay the mortgage. Because my kids need braces. Because I need to put gas in my tank. I'm not some 23 year old naive kid that can live on beans, sleep in my mom's house, and be your indentured servant until I make something of value that you take credit for and somehow finagle out of my control.
So run your business your way - that's ok and totally fair. But stop building it on the backs of those of us that don't have the time or money to play your game. I know you don't think of yourself as this way, but you and your industry are. And I smile EVERY time someone builds a business right around you. We all laugh at you. Hail to the Americans that build businesses despite you and the government doing your best to suck the life out of entrepreneurship and dreams.