Why Not?

It is common when entrepreneurs are pitching to investors for those investors to offer lots of suggestions. After all, that’s our job, right? To provide value add, guidance, etc. When you invest at the seed level, little is set in stone. Pivots are expected. Still, when someone suggests something new, think hard about whether that suggestion is consistent with your vision.

As I think back on recent meetings with companies, there have been several occasions where suggestions were answered with “why not?”. For relatively minor suggestions that’s all good. And one of the hallmarks of a great investment opportunity is that there are multiple paths to success with it. But if an investor proposes major shifts such as different goto market approaches, positioning, feature sets, etc the answer should never by “why not”.

To me, this answer could be a red flag, suggesting a potential lack of vision clarity or focus. You need to be laser-focused on your vision and even more so on that 1st MVP. Too many “why not”s can see you experience major delays and increased burn.

These questions and suggestions are not traps. We are just stress testing your idea, getting up to speed on it and seeing how big it can be. But an entrepreneurs answers to these suggestions, no matter how minor, are important. It helps us rate you and your command over the domain and opportunity.

Seed success is measured by number of iteration cycles. “Why not”s along the way can reduce the # of cycles you have and slow you down.

So, next time an investor throws a curve ball your way, don’t rush to accept it. Test it against your vision. If it works, great. If not, reject it. You can’t do everything the more focused you are out of the gate, the better…

  • http://coleensosa.co.cc/ Coleen Sosa

    Calculated or not, this reminds me a bit of presenting my final engineering undergrad project and the prof was throwing questions from many angles. The big difference is that there was a “right answer” and as long as you knew the science and physics well enough, you could nail those questions. Brains of technical people are deeply wired in a way that there’s always a right, objective, answer. It doesn’t seem to be the case when you get thrown curve balls like. As you say, it’s about focus. Do you know the hypotheses you want to test? Are these suggestions going to help getting the answers you need?

  • http://www.TheDownTag.com M. Shane Hill

    I think this post aligns with more than just dealing with potential investors. I've experienced what is being discussed first hand in discussions with potential customers, inquisitive minds, potential investors, employees, interns, and others. Yes, the question could be either a strategic "curve ball" to test the resolve of the entrepreneur/product/idea/organization AND/OR it could be just a simple question from an knowledgeable person (no matter what hat that person has on – customer, investor, etc.).

    I've been asked questions and provided suggestions that were both great and horrible…some being both. I agree that although an entrepreneur must be flexible and willing to grow/alter direction/scale back/etc.. However, on the same coin, that same entrepreneur must also stand up for what he/she knows is the "for the better", even if that ultimately ends in the investor denying funding…as heart wrenching as that may be.

    The preceding, of course, being nothing more than lessons learned from my own experiences attempting to launch a company and having one hell of a time finding money to get it off the ground. My passion for the idea and intimate knowledge on how it needs to be done if it's actually going to be financially successful (not to mention actually solve the problem I've set out to solve) may be my greatest strength and most detrimental weakness. Someday I'll find an investor that understands that I may just know more about the topic at hand than they do and trust me to get out there and solve it. I may not be an expert in business, but if I didn't comprehensively "get" the problem that I've solved, the idea would have never crossed my mind.

    End comment and tirade.

    -M. Shane Hill
    Founder, Downtag http://www.TheDownTag.com

  • http://www.thecodefactory.ca Ian Graham

    If your investor is throwing curve balls then you need to be able to assess pretty quickly if the pitch is in the strike zone and swing for the fence or outside and just let it pass. The science of people is inexact and very subjective so IMHO better to do your homework, be prepared, know what is / isn’t important and be able to rationalize why or why not.

  • http://twitter.com/brunomorency @brunomorency

    Calculated or not, this reminds me a bit of presenting my final engineering undergrad project and the prof was throwing questions from many angles. The big difference is that there was a "right answer" and as long as you knew the science and physics well enough, you could nail those questions.

    Brains of technical people are deeply wired in a way that there's always a right, objective, answer. It doesn't seem to be the case when you get thrown curve balls like. As you say, it's about focus. Do you know the hypotheses you want to test? Are these suggestions going to help getting the answers you need?

  • seed investor

    People, trust me, it's not this calculated. The curve balls are just ignorant questions by us trying to understand the business. After all, we are investors because we don't make good entrepreneurs….we compare and contrast, we don't have vision or execute. This is coming from a successful seed investor.

    • http://startupcfo.ca Mark MacLeod

      Well said… Yep, most of the time my questions are playing catch up to the entrepreneur. And when I am not playing catch up, that means I am not likely to invest.