Ask YC: Is it okay to tell VCs who else you're talking to?

https://news.ycombinator.com/item?id=180214

by shafqat • 18 years ago

3 15 18 years ago

news.ycombinator.com

Simple question: when talking to a VC, when they ask if we're talking to others, can I give them specifics? Is that bad form or can it help with leverage? Of course, this assumes we have well-respected investors or VCs who are interested!

chris_l• 18 years ago

I once read somewhere that they will tell each other anyway, because they all know each other. I don't know if it is bad form to tell them anyway, but bear in mind that they might know the truth anyway.

shafqat6• 18 years ago

Good point. I guess 'the truth' for us is not a bad thing. I'd rather they know that we have some pretty good options but I don't want to sound swarmy or conceited. To be frank, we are honored that people are interested in our product, but just want to make sure we give our startup the best chance of survival.

pg3• 18 years ago

They don't tell each other everything. So while you have to assume that anything you say to one VC might be told to any other, you can never take it for granted that it will.

langer• 18 years ago

I think it depends on how confident you are that the 'other investors' you mention want to invest.

If they want in, you could be seeding an ego battle which your startup can leverage to get better terms.

If they don't and start dissing your startup then you could be shooting yourself in the foot.

shafqat6• 18 years ago

I guess we'd rather sit tight and let our product do the talking. The more I think about it, the better that strategy seems!

pg3• 18 years ago

Never simply give them a list of names. But if you're starting to get serious interest from some VCs, you can convey this in various vague ways to other VCs to make them interested.

(Never try to fake this. VCs have a lot more practice detecting such lies than you have making them.)

shafqat6• 18 years ago

Thanks.. I wouldn't ever try and fake it. All the interest we have is real (we haven't gone after funding yet, all the VCs have contacted us) as I mentioned before, I'd rather not get involved in tactics. Always better to let the product do the talking. But appreciate the fact that I shouldn't explicitly give names.

pg3• 18 years ago

You should check whether the people from VC firms who've contacted you are associates or partners. If they're associates, you're no closer to a deal than if they hadn't contacted you.

challenjer• 18 years ago

Always, always, politely decline from naming another firm. It never does any good.

mattmaroon• 18 years ago

They certainly do ask that question 100% of the time. It's definitely not bad form, but it might be to your disadvantage. They will probably find out anyway though.

timc• 18 years ago

so i'm a VC and i don't bother to ask that question. there is no value in asking that and not a question you want to answer IMHO. Most important is to get referred into a VC if possible from someone who trusts you and who the VC knows well. VCs are a lot more frank with a trusted referrer usually than they are with the entrepreneur and the referrer can signal that the deal is getting traction. That seems to matter, probably too much, to most VCs.

shafqat6• 18 years ago

thanks for the tips. i guess the weird thing about our situation is a lot of VCs have contacted us. we're super early stage and weren't explicitly looking for funding. but as a result, we've had some awesome meetings and built some really good relationships. is it weird for VCs to contact entrepreneurs directly without referrals?

rms• 18 years ago

How do you think the VCs heard about you to start getting in touch? Are your private alpha users that influential? That's a pretty good sign.

And can I try your site? I signed up with the email kfischer at gmail

Ask YC: Is it okay to tell VCs who else you're talking to?

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