When to walk away from a VC who wants to invest in your startup

Published May 24, 2021

Ofri Ben-Porat
Contributor

Ofri Ben-Porat is the co-founder and CEO of Edgify, which focuses on federated learning frameworks and democratized training.

Venture capitalists add value in a number of ways. For example, one of my business’ backers has a deep tech “pod” that generates events and content we are always welcomed to be a part of. Another one of our investors gives us full commercial support through its network of mentors that are there to support the business, not the VC.

Due diligence works both ways, and entrepreneurs shouldn’t be in a rush to take investment from anyone that offers it.

I might not expect that from every VC, but if they promise those “assets” by saying that they are here to drive innovation and growth, then I expect them to deliver, just as I have to back up the claim of having a team of supersmart machine learning researchers.

They might know the forks in the road, directions to take, and who to speak to based on having been through the process with similar companies. They might have venture partners that can mentor you and a network of investors that can participate in follow-on rounds. That is where they add value.

The best ones will seek to connect with you personally. They’ll have prepared thoroughly beforehand and are brimming with questions. While they may have preconceived and potentially ill-informed ideas, they demonstrate enthusiasm by starting sentences with “what if,” and they leave me emboldened but contemplative. I fully expect to be provoked in the right way.

However, some also play God. One experience offered up a major warning sign, one that would make me walk on by.

I’m pleased to say my business has some outstanding investors who totally get it. Our investors’ head of investment told representatives at one of New York’s top funds that one of their leading deep tech portfolio companies was coming to town for a “blitz meeting session.” They announced that they were committing to the round I was raising and that we were looking for a new lead investor.

So, put it this way: I wasn’t a guy who walked off the street with a crazy idea, but you might have thought otherwise, given the experience that followed. To be clear, I don’t expect all VCs to open their arms and embrace everyone, but there are rules of engagement.

The transparency and value of DocSend

After a very positive morning meeting, I’d scheduled a couple of hours for a quick chance to grab a breather at my hotel. Flicking through my phone, an email from the associate at the VC I was due to meet next pinged into my inbox.

“Hey Ofri, it’s Jessica [not her real name], really sorry, I’m not feeling great so am thinking I might cut the day short. I know you’re only in New York the next two days, so let’s catch up later on a call and next time you’re over I’m sure we can revisit.”

I started composing a polite response: “Really sorry to hear that. Absolutely fine to reschedule. Let me know your availability, etc., etc.” In truth, I was irritated — this had been in the diary for two months and was one of six meetings scheduled. I was not sorry; I was annoyed.