Too early?
Many times in the life of a start-up, we find ourselves asking the question: “Are we too early?”. Too early for:
- Talking to customers
- Talking to partners
- Hiring the VP Marketing
- Hiring a CFO
- Shipping the beta product
- Talking to VC’s
- Raising the next round
etc., etc., etc.
In this post, I would like to discuss “Too early for VC”. When an entrepreneur is just starting out, and doesn’t quite have the full story figured out, most people advise “don’t talk to them”. In some cases, I might agree, however, with the following HUGE caveat: Depends with whom would you like to talk!
Yes, biased I am… since I (as well as my partners here at Gemini), prefer to see entrepreneurs as early as possible, knowing all too well that the discuss is potentially premature. By engaging at this nascent phase, we learn to work with an entrepreneur, learn how they think, work and see the progress (and they with us). It is very time consuming for us, but it is also extremely rewarding. Is there a risk that the company is totally off track, and will never be able to approach said VC again? Maybe. However, if you do your DD properly, and get an understanding of the person with whom you will be meeting, you can mitigate this risk significantly.
This same point holds true for the next funding round. Once I have invested in the Series A, eventually that Series B will come along. There are specific targets that make a company “B ready”; some achieve B-readiness well in advance of their need to raise additional capital, with others it takes a bit longer. Post the A investment, many VC’s will be monitoring the progress of this company in order to be there in time to make the Series B investment. Often, we are asked for meetings before we are ready to fundraise. Often it coincides with a trip to Israel by a foreign venture capitalist. Being Israeli, we like to be opportunistic, since after all, the person is already here, etc. This, however, can be a mistake! Unfortunately, too often, the company can be judged as being “too early”, when it is in fact “too early” . The only reason the meeting was scheduled was in response to the opportunity presented - and it backfires and we find ourselves having to fix a situation that we shouldn't have really gotten ourselves into.
So, what is my view? Tread carefully. And if you are indeed too early for a Series B meeting, and a Series B investor is “in town”, or wants an “informal meeting” or agrees to serve as a “dry run”, just decline politely (unless there’s something in the relationship that you feel will allow you to have a real value-adding open discussion…).
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