Fred’s VC Cliche of the Week this week is called "the pass," which is the euphemism that VCs have adopted when they decide not to invest in a particular company or entrepreneur. Fred’s VC wisdom comes down to this:
1 – Say no quickly to the things you know you aren’t going to do
2 – Don’t take an opportunity into diligence unless you are willing to spend
enough time to truly undersand it, and if you don’t invest, make sure you are
willing to spend time explaining why.
It won’t make it any easier on the entrepreneur who is trying to find someone
to invest in his business that you are passing, but they might
learn something from the discussion, and in the end you will gain their
And in this age where VCs and their money are a dime a dozen and great
entrepreneurs are rare, respect from entrepreneurs is critical to success in the
The counter cliche is that the same advice applies to entrepreneurs who "pass" on a particular VC. There are many times where startups (especially good ones) have offers on the table or are pursuing them from multiple VCs. That strategy is a must and one that I’ve blogged about before.
VCs may be a dime a dozen, but great ones are hard to find. If you find yourself in the position of having to "pass" on one of them — follow Fred’s advice and do it quickly, politely, and without wasting any more of their time.