daily articles for founders

The psychology of a VC, and how to take advantage of it  

Great article by Roberto Bonanzinga looking at investment difficulties from the point of view of how the VC decision processes happen:

The decision struggle has two different dimensions: first, the venture capitalist needs to convince himself/herself about the investment. Second, depending on the partnership decision making process, he/she will also need to convince his/her partners. Different investors approach this problem in different ways. I have noticed that in Europe, a very common way to deal with the decision struggle, is to procrastinate. Some investors never give an answer and keep going asking for additional data points in the hope that the data will make the decision for them. I have never seen data making decisions by themselves and I am pretty sure it will never happen. Still the practice is quite well spread.

And then from the point of view of how the entrepreneur can make use of this:

First, try to understand if you are talking to a decision maker (aka partner). If you are stuck talking to a non-decision maker try to play the venture firm politics until you find a way to engage with a decision maker. It’s also very important to understand how the firm decides and the partner’s role in that decision. Best way to learn this is to ask direct questions and call other entrepreneurs who have already gone through the process with that specific firm/partner.

Well worth a bookmark.

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Dispelling the overnight success myth
Why VCs do what they do
Paid iPhone apps vs in-app purchases
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