In the course of pitching over 100 VC’s in the last few years I can say that the majority of people are well-intentioned and straight forward. Yet there are circumstances when an investor asks for your numbers and for more granularity and you should say, “NO.”
Because they are thinking of doing a different deal and they just want your information to help them make a decision to fund someone else. While it is hard to know for sure, and it’s best to assume positive intent, here are three tell tale signs that you are just being used for your data.
1) Low Level of Interest and Enthusiasm
In-person pitches are best because you can read body language, see if the meeting happens on time and so forth. I have been in pitch meetings where you can feel that there is little enthusiasm from the investor. They are paying attention, if barely, and are just not engaged. That’s fine. Not every deal is for everyone. But when they follow up and ask to see the numbers, then you know. If they weren’t interested when you were in the room, then why are they interested now.
2) Asking for the Data Early On
Good investors know it is about the team and the market. Data requests usually come later in the process as when you are essentially making a bet there’s only so much information you really need. When I have a suspicion that someone is just fishing for numbers. I tend not to respond, or I respond with more strategic information. When early on in the process they repeatedly ask to see your data, it can be a warning sign.
3) Ask Around
Any entrepreneur who has had this happen to them can tell you exactly who acts this way. Especially when they read in the tech press that the investor they have been priming with information just made a competitive investment. You never forget that. So if you have any doubts, ask around. Other entrepreneurs will be happy to share and in my conversations, I have found it happened to them as well.
The one caveat is that you can not generalize about a firm based on one partners behaviour. But you can certainly generalize about that partner. Keep your data close and reserve it for only those you really trust.
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