Don’t cross the streams…Let me know if you have already spoken to someone else at First Round

Avoid the long, drawn out maybe

Raising money can suck. It is a distraction from running your business and selling your dream is exhausting. When I did it, I counted on lots of introductions from advisors and friends as well as referrals from attorneys, accountants and other service providers. I had a list of potential investors and hustled to get in front of them. Due to timing and the length of the process there were times where I got multiple introductions to different people at the same firm. When this happened, and the second person agreed to meet with me, it felt like a second pass over the same target…This was not the case and I quickly learned the problem with crossing the streams.

Typically my second contact had no idea I had already met with another person from their team and what I assumed was a second meeting was actually a waste of my time. Each of these meetings ended with the same next step: “Thanks for coming in. I’ll talk it over with (insert person you already met with here) and let you know where we end up.”

Now that I am part of an investment team, I see this from the other side of the table and hate it just as much. I do my best to avoid this type of confusion, but invariably it happens and I am writing this because it happend the other day. However, in this recent case, the founder did me a huge favor and created a ton of value for both of us. After being introduced, they wrote me the note below (with a few changes to protect the innocent):

It’s a pleasure to e-meet you, and I’m ecstatic to hear you are a fan!

I also want to tell you that I met with Josh Kopelman a few weeks ago to ask for advice on our pitch, and he mentioned (a specific risk) would be a concern before investing.

We are quickly evolving the product based on our beta user feedback and have made progress around (specific risk) since we spoke with Josh. Regardless of where First Round comes out as an investor, it would be wonderful to meet you and get your honest thoughts on what we are doing.

I’d certainly be interested a call next week, if you think it would be worthwhile.

In this simple note, they help me understand my colleague’s concern about the business as an investment and encourage me to get his perspective as part of my decision to move forward with a meeting. They also made it clear that they would find value in meeting with me regardless of First Round’s position as a potential investor. The note could just as easily say they would only like to meet if First Round is interested in an update as a potential investor.

There have been times where the business has evolved and a second meeting resulted in an investment. There have been times where I share my colleagues’ concerns after the update. But in every case, knowing that a founder has already met with someone else from our team and having the opportunity to get their perspective is helpful.

The transparency adds value to the process and we all move toward a decision rather than a maybe.