I'm at the National Association of Seed and Venture Funds meeting in Rochester NY today.
One of the speakers this afternoon, talking about helping entrepreneurs get ready to present to investors, said something like this:
"Instead of letting people who I don't think are investable spend a lot of time on presentations to investors, I just tell them they either aren't investable or shouldn't be in business."
Now, let's assume that there are potential entrepreneurs that "shouldn't be in business," and that a smart advisor can accurately identify them.
The question is, though, who gets to tell them?
There isn't anything in it for the investor to tell them, especially if the entrepreneur(s) are in sales mode. The investor does not want to be critical, is concerned he may be incorrect, and worries about protecting his reputation-based deal flow. So he says things like "we aren't investing in these type of businesses right now," or "our investors don't seem to be sufficiently interested to warrant you spending any more of your time."
Occasionally the investor gets a frustrated blowback from the potential entrepreneur, perhaps underlining that "uninvestable" belief.
If you're getting these kinds of vibes, and before you shop a deal so thoroughly that the guy bagging groceries at the local store knows about all of its flaws, figure out your personal best way of getting critical feedback. Try using a diligence checklist (you can find them anywhere) to walk through a series of questions with the (now-ex) investor. Listen. Don't argue. Seek to learn. Or devise some other way to disarm the investor enough to get helpful information.
Look yourself in the mirror and ask what you are hearing. Do there seem to be areas of importance that you don't know about? (As an example, are you getting signals that your claims/beliefs are hard to validate? Does that suggest you ought to seek validation prior to pursuing more investment?) How can you cover these?
Have you benchmarked yourself against others to see what you may not have? Or may need? Have you tried asking the investor about these things?
Are you looking for the wrong kind of investor? What kind of investor is your business best suited for? And so forth.
I'm a bit surprised at how many potential entrepreneurs really don't want feedback and waste a lot of time - years - finding out they're not investable. And then finding something to blame (environment, poorly educated investors, low risk taking attitude here in ---fill in the blank --) rather than learning.
Four weeks of experience is repeated twenty times. (No mistakes in life, just lessons repeated until learned!)