This story first appeared in the November 2015 issue of Entrepreneur. To receive the magazine, click here to subscribe.
Like people in any business, we in the VC world love to exchange horror stories. Ours tend to focus on absurd pitches: perpetual-motion machines, kitten sweaters and everything in between. Our cumulative experiences would rival the gag reel on Shark Tank.
Despite this, we do our best to educate — not humiliate — founders. It’s our job. People invest millions with VC firms so that we’ll go out and find the next Facebook or Uber. That means taking meetings — lots of them. Conversations with entrepreneurs are the lifeblood of our business. We spend most of our time listening to far-fetched pitches, but doing so makes us better. That’s because venture capital is a numbers game, and reviewing as many ideas as possible, including the bad ones, helps us identify the ones that just may strike gold.
It’s common for VCs to pass on an opportunity multiple times before investing. But with each refusal comes feedback and an understanding that the door is open to pitch us again. This may seem like an agonizing way of getting to “Yes,” but we do it in part to see how a founder responds. It’s a good indicator of coachability and a look into how an entrepreneur will deal with customers, partners and co-workers.
We also take meetings because reputations matter. Entrepreneurs talk to others, and word travels fast about VC firms that aren’t friendly to work with or aren’t worth anyone’s time. Fear of missing out gives us nightmares, so we play nice and engage in any way we can. The best of us speak proactively with entrepreneurs via social media, sharing advice and insights that can elevate our firm’s profile and help future entrepreneurs learn from others’ mistakes.
Surprisingly, it’s the worst pitches that can bring out our best. It would be easier for us to say, “Sorry, no deal” to a flailing entrepreneur than to dive in and help out, but we don’t do that. Because we never know if today’s failure will become tomorrow’s billion-dollar unicorn.
We’ll save the laughs for the bar.