Don’t Waste My Time

The rough graph below will likely tell the story much more quickly and succinctly than a lengthy, descriptive paragraph.


As one might imagine, the money flows track well against my make-shift graph above. In 2014 private equity and general M&A absolutely dwarfed the investment dollars committed by venture capital groups during the same period. Compare $13T+ for PE/M&A deals with roughly $40B for venture capital. I’ll be the first to admit that the comparison is somewhat unfair, given the fact that VCs are often focused on nascent startup and earlier stage deals (with very low basis), while M&A is much more broad and includes corporate (private & public) buyers and hoards of private equity groups with boatloads of committed capital. But if cash is king and money talks, should we be wasting our time on startups?

Feel free to ignore the ignorant rhetoric, but company financiers often have to sift through thousands of business plans and pitches before they find something that rings well. Luckly sites like Gust and Angel List (and even some of the newer equity crowdfunding portals) are helping to streamline this sifting process, allowing financiers to filter the chaff before the chaff comes calling.

Unfortunately, hearing a pitch from startup entrepreneurs with new ideas takes a lot more of our allotted time than any other potential investment opportunity. As a percentage, they also tend to waste a lot more time as well. There are at least several reasons for this:

  • It’s a simple bell-curve distribution with a major right tail. There are many more people hoping to raise money than those who actually produce it. Hence, the lion’s share of deal volume is going to be in the very bottom quartile.
  • Supply/demand economics tilt the balance against startups. In the M&A/capital advisory circle there are more advisors hoping to provide services to a seller than sellers looking to find representation. The opposite is true in sourcing capital. There are more people looking for this limited resource than there are those providing access to capital.
  • It makes pitchers feel good. Someone who may be looking for real capital advisory will likely ask a few questions and spend a lot more time listening. Someone looking to source capital is searching under every bush and is spending a great deal of time selling folks on his/her product or service. It makes them feel like their moving the needle when, in many cases, their simply wasting everyone’s time. That’s why its often good to have people on our team that don’t fear providing input that is sometimes brutally honest.

Frog-kissing is one thing, but spending 30 minutes on a call with someone who I would have written-off immediately at the executive summary level is annoying. One might argue that you never know where a contact or introduction will eventually lead, it’s been my experience that we must decide whether or not a particular budding relationship will be relevant down the road in the first five minutes.

Fact is, most startups ideas are garbage. The teams often mirror the quality of the business plans we see. As is fairly common, an “A team” with a “C idea” is always better than a “C team” with an “A idea.”

I don’t appreciate it when people waste my time. I don’t want to waste your time either. Was this post relevant to you? How can we improve? I want to ensure the content being sent matches the audience.

Nate Nead on LinkedinNate Nead on Twitter
Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC which includes InvestmentBank.com and Crowdfund.co. Nate works works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He is the chief evangelist of the company's growing digital investment banking platform. Reliance Worldwide Investments, LLC a member of FINRA and SIPC and registered with the SEC and MSRB. Nate resides in Seattle, Washington.
  • Peter Edward Welch
    Posted at 16:56h, 10 March Reply

    Wasting my time, absolutely not for it’s interesting to gauge your perspective. I do feel that use of technology could significantly reduce wasted time on your part. Set up a Q&A on your website with very carefully worded questions that should identify the potential positives worthy of your efforts versus those you just simply ignore. You could even have certain responses (drop-downs) automatically forwarded to your inbox. The rest perhaps you assign to your team to evaluate possibles! You just request that all cold calls complete that Q&A and if you’re interested you’ll be back in touch. Recruiters in international development assignments do exactly that which identifies if a good match exists which will be followed up with requests for rate, availability and if not provided by the Q&A, references etc. Your thoughts Nate.

    • Nate Nead
      Posted at 17:56h, 10 March Reply

      Yes Peter. Using technology is extremely helpful at this. It’s just one of the reasons we’ve created more forms and removed some of the direct contact information on some of our sites. We have a number of questionnaires that we now use to pre-filter opportunities and provide direction for our conference calls so time is not wasted. Unfortunately, sometimes it’s that there is a mismatch in the opportunity, not that the opportunity itself is bad.

  • CrowdFundingPlanning
    Posted at 19:53h, 10 March Reply

    Thank you Nate, We get over 100 requests or inquiries per day regarding CrowdFunding project and campaign consultation or promotions. You know there is only 24 hours in a day. As peter said, we use technology to reduce wasted time for both us and our CrowdFunding Project owners. However we make sure we call all to make sure we care . I know of a guy that sold stone ( Pet Rock) , we got to make sure all ideas are carefully studied and evaluated.. At the end we want to make a difference and be there when a simple but powerful idea or innovation changes the world.

    • Nate Nead
      Posted at 19:58h, 10 March Reply

      Hi David. I like your mention of direct contact to show you care. It’s not that I’m trying to sound callous or pompous (I’ve been there and I know what it’s like to try to raise capital), but there has to be a happy middle-ground between running your own business and not running ragged–as they say.

      Making a difference typically means value is added in some way. Would love to hear more details about your filtering process….

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