How To Talk To VCs

I spent most of yesterday at the SMU Spears LAUNCH Accelerator Demo Day, where nine startups closed out a demanding 12 week program. I was a mentor and speaker throughout the process, so I watched the pitches get sharper and the plans get tighter along the way. What stayed with me was how the founders carried themselves. These students started out with little idea of what entrepreneurship, or fundraising, actually entailed. By demo day they could tell their story with confidence and build a real relationship in the room. That came from repetition. The program kept putting them in front of advisors and investors until the fear wore off. Most programs hand out a couple of introductions and call that mentorship. This one kept sending new people into the founders’ path, each with a different background and a different set of opinions, until the founders could talk to anyone.

I noticed it so strongly because of what happened a couple weeks earlier. I was on a VC panel about AI at DFW Startup Week, and when it ended I got swarmed. That’s fine. I show up to those things to be useful. One of the other panelists walked out the second we finished, which in retrospect was the move of a man who knew exactly what was coming. I stayed for an hour and a half… and honestly, most of those conversations were pretty rough.

Five Conversations

I’ll lay these out plainly, because I don’t think a single one of these people knew they were doing it.

The first guy opened with his idea. No question about what I invest in, no look at the fund site. He went straight to the concept and how much money it would make if someone funded it. I won’t repeat the idea to protect his privacy. It had nothing to do with anything I put money into, and thirty seconds on my bio would have told him that.

Another pulled out his laptop, waved me over to a table, and started clicking through a demo. I could see what the product did. I had no idea how he planned to make money with it or where he thought the whole thing was going. After a few minutes of screens I interrupted and asked what the business model was. He seemed confused that I’d asked.

A third was building a finance app with proprietary algorithms that would help day traders make money. I mentioned that a lot of apps are already fighting over that customer, then asked the obvious question. If his algorithms really produce the returns he was claiming, why not run them with his own money and get rich? There’s a decent answer available. Fee income is steadier than trading returns, and a 40% return on the $8,000 you actually have doesn’t change your life. Real quant shops take outside capital for exactly those reasons. He didn’t reach for any of it. He stumbled through something about wanting to help people, which is not what a day trading app is for. He wanted the upside without putting up the stake.

A fourth disagreed with every piece of advice I offered, then told me what she really needed was an older retired guy with money who’d fund the idea without asking too many questions. She said that out loud, to a working investor, standing in front of him. She was asking a professional skeptic to go find her someone who isn’t one.

The fifth asked, about two minutes in, whether I could introduce him to other investors since his space wasn’t mine. Dude, I don’t know you. An introduction spends credibility I’ve built over years with the person on the receiving end, and he wanted me to spend it on the strength of nothing.

I’m not trying to be an ass about any of this. None of them were bad people, and I stayed polite the whole time, though I could feel it slipping by the end. The common thread is that I’d stopped being a person in the conversation and turned into a resource to extract from. Every one of them wanted something, and not one had spent a few minutes figuring out whether I was the person who had it.

What You’re Actually Asking For

Capital is the commodity in this exchange. There’s a lot of it floating around, and mine spends the same as anyone else’s. Time and reputation are the scarce goods.

When you ask for an intro, you’re asking me to lend you my standing with someone who takes my calls because I’ve never wasted their time. The upside for me is real but slow. Send good deals for long enough and people start sending them back. The downside shows up immediately, because one bad forward means the next email I send gets opened a little more slowly. That asymmetry is why investors ration introductions so carefully, and it’s why the ask lands strangely coming from someone I met ninety seconds ago.

The same logic runs through the pitch itself. Two minutes of unscripted conversation tells me more than a deck does, because the deck is the version of you that had plenty of time to prepare. The way you open with a stranger who has something you want is the version of you that shows up when a customer pushes back or a board member disagrees. I’m judging that whether either of us means for me to.

Money Without Scrutiny

I keep coming back to the founder who wanted the retiree. She described the worst investor available to her and thought she was describing the best one. I tried to explain why, and it didn’t land. She read hard questions as friction, when hard questions are what interest looks like from an investor.

I’ve written before that most companies shouldn’t raise venture capital at all. Wanting funding without scrutiny is a strong signal you’re not really ready to raise money from anyone. If the questions feel like an obstacle instead of a stress test, what you want is probably a loan, or to state it bluntly, a sucker.

The Ones Who Did It Right

Plenty of the conversations were good. A few students asked how I got from biomedical engineering to running a fund, and whether going deep on data science was worth it. They weren’t pitching anything. They were curious, and I’ll take that conversation any day of the week.

Others introduced themselves and asked to connect on LinkedIn. That’s the correct move. You can’t build a real relationship in three minutes in a crowded hallway, and trying to compress one into that window produces everything I described above. What you can do is become a name I recognize the next time it turns up. Most of my best relationships in this ecosystem started exactly that small.

To be honest though, my sample size is skewed. The founders who line up after a panel are the ones without a warm intro. Anyone with a mutual connection is already in my inbox and never has to stand in that line. So the people running the worst approach are the ones with the least access to begin with, spending down what little they have and not knowing it. Nobody has told them. That’s the actual failure, and it’s fixable.

The part that sounds like soft advice is the part I’d defend hardest. I’ve never written a check to someone I didn’t like. Not once. Liking someone doesn’t get them a check on its own, and plenty of founders I enjoy talking to never get money from me. It’s still a requirement, and the reason has to do with what I’m actually buying. Companies pivot constantly, and the business I fund usually isn’t the business that exits. What I’m underwriting is whether this specific person can hold a team together through a version of the plan that doesn’t exist yet. I need to believe you care about the problem past the point where it stops being fun. Anyone who’s mainly in it to get rich fast, or looking for someone else to finance an experiment they won’t finance themselves, tells me so within a few minutes without meaning to.

So start with the easy part. Ask a question and find out who you’re talking to before you decide what to say. Treat the other person like a person, and let the relationship come before the ask.