Monthly Archives

January 2012

Software will eat the *whole* world

By | Innovation, Ray Kurzweil | 5 Comments

Back in August Marc Andreessen wrote an article in the Wall Street Journal explaining why Software is eating the world. His main observation was that the fastest growing companies in almost all industries are betting their future on software. He gave several examples of which the best two from a breadth of industry perspective are Amazon and Disney/Pixar:

Perhaps the single most dramatic example of this phenomenon of software eating a traditional business is the suicide of Borders and corresponding rise of Amazon. In 2001, Borders agreed to hand over its online business to Amazon under the theory that online book sales were non-strategic and unimportant.


Today, the world’s largest bookseller, Amazon, is a software company—its core capability is its amazing software engine for selling virtually everything online, no retail stores necessary. On top of that, while Borders was thrashing in the throes of impending bankruptcy, Amazon rearranged its web site to promote its Kindle digital books over physical books for the first time. Now even the books themselves are software.


The best new movie production company in many decades, Pixar, was a software company. Disney—Disney!—had to buy Pixar, a software company, to remain relevant in animated movies.

The ‘software companies win’ trend is highly visible in many other industries as well – e.g. entertainment (Netflix, Zynga), music (Spotify), direct marketing (Groupon), telephony (Skype), and recruitment (LinkedIn).

I’m thinking about this today after attending a one day session of the Singularity University (SU) in Rotterdam yesterday. The Singularity University was founded by Ray Kurzweil and Peter Diamandis to “assemble, educate and inspire a new generation of leaders who strive to understand and utilise exponentially advancing technologies to address humanity’s grand challenges”. That’s a big vision and yesterday was an inspiring day. Kudos to Yuri van Geest for putting it together.

“Exponentially advancing technologies” are the three most important words in the SU vision. The most famous exponentially advancing technology is computer processors whose power doubles every 18 months (Moore’s Law) but many other industries are now progressing at similar rates. The folk at SU have done a lot of work on this and it turns out that once an industry becomes digital then it jumps onto an exponential progress path and stays there. Computer processing power has been improving exponentially for over 100 years now.

Before I go on I want to take a moment to dwell on the implications of exponential progress. The physical world in which we evolved operates linearly and our brains are hardwired to think accordingly, and because we extrapolate linearly we routinely under-estimate the impact of technologies that are growing exponentially. Global phone penetration is a good example of technology that grew exponentially and analysts routinely made projections based on linear extrapolations and saw the market come in ahead of expectations. I need to look at the data, but it seems to me that the same thing might be happening to mobile advertising now. Underestimating a market generally means missing an opportunity.

I think there is a link between software eating the world and digital industries enjoying exponential growth. Software is digital, and industries that are dominated by software will innovate and grow faster, and, most importantly, the players within those industries that move towards software first will out-perform the laggards.

We spent a lot of time at SU yesterday discussing how biology and healthcare are becoming digital industries. The cost to sequence a human genome is now around $1,000 and is falling by up 80% a year and there are new technologies for synthesising and manipulating DNA which are abstracted from the physical process. Innovation in healthcare is moving from being expensive, lab based, and rooted in manual process, to inexpensive, office based and rooted in digital process. In other words it is becoming software oriented and will move onto a path of exponential improvement. This is tremendously exciting from the perspective of startups, and of world health :). The applications will be both medical (better, more targeted drugs) and health oriented (e.g. diets customised to your genetic profile, low carbs for one, low fat for another). This is still futures, but it is no longer too far out.

3D printing was also prevalent on the agenda, because 3D printing makes industries digital. We saw details of a conceptual design of a 3D printer that prints houses – one ever 1.5 days. Similarly printers for meat and even human organs are in the works.

Back to the bigger picture, if biology can be understood, modelled and manipulated digitally, and 3D printing advances as expected then almost every industry is vulnerable to digitisation and innovation will become software based. The importance of software will be even more widespread than Marc Andreessen imagined.

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Eric Ries answers questions on the application of lean startup principles in some edge case scenarios

By | Innovation, Startup general interest | 6 Comments

It seems that every other startup we see these days espouses lean principles.  I’m not always sure that there is a thorough understanding of what that means though.  Partly for this reason I recently wrote a post about how Path and Flipboard are seemingly abandoning lean startup principles which, combined with discussion in the comments, raised a few interesting questions about the implementation and applicability of lean startup principles.  We have now put those questions to Eric Ries, who was in town last week for the launch of his book Lean Startup – The Ultimate Guide to Lean Startup.  The questions and answers are presented below.


(Nic) At companies like Path and Flipboard they believe that high design values are a key part of the value they provide to consumers.  According to lean principles they should test that hypothesis as quickly and cheaply as they can, but delivering a high quality well designed user experience takes time and fast learning may not be possible.  How should companies like this approach product development?

(Eric) It’s a great question, the two things are not necessarily mutually exclusive. Even great design can be tested. Often, customers care less about the things that you think they will. At IMVU for example, we set out with some very high expectations about the quality of what we wanted to deliver but using Lean Startup principles we discovered something very interesting. We wanted our avatars to move around virtual environments in a very ‘real’ way. We wanted to build physics engines into the system that offered a very high degree of realism. This was really, really, hard to do. We tried a very clunky, simple approach to the problem instead. Our avatars moved instantaneously from where they were, to where they wanted to go. Inelegant and simple. Customers loved our ‘Teleport’ feature. The cost of delivering the solution we wanted to just didn’t make sense after that.

(Nic) Short iteration cycles and rapidly validating learning are key tenets of the lean approach.  These can be challenging on mobile given the time it takes to get new versions of apps approved and live in stores.  Is ‘lean’ therefore less applicable on mobile?

(Eric) It certainly makes it harder to do continuous deployment! The feedback that you can get from even a relatively small set of customers/testers though is always going to be helpful in focusing your development activity on the things that matter. The feedback you can get, even from a relatively small number of test users should be enough to give you real insights into what is valuable to people if you know what questions to ask and are honest about what you learn. Releasing a version of an App with new features that then becomes more popular, does not necessarily mean that those features are the reason that the app has become more useful. You need find ways to understand what customers are actually doing. Given the constraints of App Store approval, you also need to be able to see what customers are doing with the new app. Find some users that you can observe in the wild. Sometimes, the qualitative information that you can get from observing 10 or even 20 users will be as valuable to you as a bigger dataset of 1,000s.

(Nic) Does producing a minimum viable product in advance of a company having a commercially viable product just tip competitors off to what we are doing?

(Eric) This is a question I am always asked. People always overvalue their ideas and it is natural for people to want to protect their IP. Entrepreneurs should always try to find a way of socializing their ideas and getting feedback from real people – your friends are always going to be encouraging! Try this experiment to see how unlikely it is that someone will steal your idea. Take your second best idea for a business and try to get someone to steal it. Even if you sat down the lead product management people in the biggest company in the world and offer them a solution to a problem they have had forever, it is almost inconceivable that the idea will be ‘stolen’. (Note – Eric seems to have answered a different question here – i.e. will launching an MVP get my idea stolen?, rather than will launching an MVP damage my brand?)

(Nic) Most of the discussion around lean relates to consumer services where the cost of failure is minimal. Are lean principles equally applicable to startups with who are building products their customers will rely on for mission critical systems (e.g. banking systems, security software, some healthcare services) or which require significant capital investment (e.g. semiconductors, some cleantech)?

(Eric) There are always situations where lean startup ideas will be less important – frankly, if you know you can develop a successful cure for cancer, you don’t need to spend too much time validating the idea. In this situation the risk is in technology development and execution, not in the addressable market. For large scale, long term projects however, there is almost always a case for a company to remain focused on the important stuff. Organisations should not be afraid to change direction in the light of market feedback and that can come from iteration between the business and technology people. Let’s say you are building a piece of hardware that enables simple, high quality video conferencing and it will take two years to go from idea to market ready product. If you are not constantly aware of what the market is doing, you could easily end up with a product that is well designed and beautifully coded, but is just redundant as other products are bought to market. I think one of the most important things for the organization to understand is that just because someone has spent hours building something, it doesn’t make it right. If an engineering team has invested 5 person years to develop a solution that still requires 2 more years of work to finish, and the problem is solved elsewhere, how responsible is it to continue that development?

You can also find ways to test and prioritize your development on long term projects. That video conferencing startup for example could build web sites or landing pages that offer elements of their solution to the market and then observe which ones get the most interest. This might not be perfect data, but it is likely to be more useful than no data  at all and a long list of unprioritized features.

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Innovation is a learnt skill

By | Startup general interest | 4 Comments

I have recently started reading Clayten Christensen’s new book, Innovators DNA: Mastering the Five Skills of Disruptive Innovators, and the core thesis is extremely powerful – we can learn how to innovate. As you may have gathered from the title of the book there are in fact five skills that make people innovative. This runs counter to the generally held view that innovation is something some people are simply good at, whilst others are not.

The authors arrived at their thesis empirically, after interviewing dozens of “inventors of revolutionary products and services as well as founders and CEOs of game-changing companies build on innovative ideas." They also include what they learned from Steve Jobs, Richard Branson, and Howard Schultz (whom they did not interview) whose innovative thinking has transformed entire industries.

I think the study alone was pretty robust, but, as further evidence that innovation is a learnt skill the authors cite research by Reznikoff, Domino, Bridges and Honeymon which studied creative ability in 117 pairs of identical twins and found that only 30% of performance in creative tests could be explained by genetics. The corresponding figure in intelligence tests was 85%. The takeaway: geniuses are born, innovators are made.

The authors list the five skills of innovation as:

  • Associative thinking
  • Questioning
  • Observing
  • Networking
  • Experimenting

I nearly titled this post ‘Anyone can learn to innovate’, but I don’t think that is quite true, as to me it seems that one can learn to be questioning, be observant, network effectively and experiment well, but associative thinking is maybe more akin to intelligence, i.e. an ability you either have or you don’t. What Christensen and his co-authors do make clear, however, is that much of innovation can be learnt, and they show us the skills we should focus on if we want to become more innovative.

This work also shows the characteristics startups should look for in new hires if they want to remain innovative, and the behaviours that should be encouraged to maximise the innovative potential of existing staff.

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New mobile advertising data – market growing fast, Google and search dominate

By | Advertising, Mobile, StrikeAd | No Comments

US Mobile Ad Spending, 2011-2016 (billions and % change)eMarketer released some new data yesterday with the most detailed breakdown of the mobile advertising market I’ve seen to date. eMarketer have a history of being amongst the most bullish on this market. They were the first company to predict that 2011 mobile ad spend would top $1bn in the US, and they are predicting big growth again for 2012. Their new figures predict US mobile ad spend will reach $2.6bn in 2012, 80% up on the 2011 figure of $1.45bn (which was significantly higher than the $1bn eMarketer had forecast). Moreover, as you can see from the inset chart there is significant growth still to come.

For those of you who are sceptical about analyst forecasts eMarketer published a table which shows how different firms see the mobile advertising market. The eMarketer figures are roughly 2x the lowest estimates.

The new information for me was which companies have the leading market share and how the market breaks down between different advertising formats.

Search accounted for 45% of the market in 2011 ($653m) and the share of search is expected to rise to around 50% in the coming years. Google dominates search with around 95% market share. I’m not sure I’ve ever done a mobile search with a search engine other than Google.

Display was 31% of the market in 2011 ($445m) and the share of display is expected to rise to 37% over the next five years. Google also has the largest market share in display, but at 25% their position is not unassailable. Millennnial Media (who recently filed for IPO) and Apple’s iAd are equal second, each with around 18% market share.

If you’ve been reading this blog over the last week or so you will have seen that DFJ Esprit recently invested in StrikeAd, which plays in the display segment of the mobile advertising market. The interesting sub-trend within that market is the shift towards exchange traded media. As far as I’m aware there are no analysts forecasts for how mobile display splits between exchanges and ad networks but from our work we estimate that around 10% of mobile impressions are currently exchange traded, but we expect that to rise to around 50% of impressions over the next year or two.

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Advertising is becoming less effective, bringing product quality and service to the fore

By | Advertising, Conversocial, StrikeAd | 3 Comments

This chart (data from Comscore, published on shows that younger people are more ‘ad-blind’ than their elders, as shown by immediate recall. To me this is evidence that advertising works less well than it used to. It is interesting that delayed recall is better for millenials, and I think that probably reflects greater loyalty to brands that have genuinely impressed. Millenials are people born in the 1980s and 1990s, now aged 13-31.

If advertising is less effective then companies will be forced to turn more to product quality and service to build their brands and drive sales. This is clearly good news for us as consumers, but there are a couple of interesting business trends that come too. Firstly there is a call for innovations to improve product quality and customer service, most obviously using social media and leveraging mobile, and secondly there is a call for innovation that will help reverse the decline in advertising effectiveness (better targeting, more relevance etc.).

Two of our recent investments at DFJ Esprit play to these trends. Conversocial helps major brands like Groupon and ITV leverage improve their customer service using social media, and StrikeAd allows for real time targeting and campaign optimisation for mobile ads.


(our portfolio company Conversocial helps h

  • Innovative service plays – like Conversocial
  • Advertising will have to get more effective – StrikeAd
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The DLD conference – Thinking big

By | Innovation, Startup general interest | No Comments

I’ve been at the excellent DLD Conference in Munich for the last couple of days and it’s been a lot of fun. Great content and great networking. My day to day work of making investments and working with portfolio companies is mostly focused on practical matters concerned with the here and now and it is great to take a step back and think about the big picture every now again. It isn’t too much of an exaggeration to say that DLD has been all about the big picture.

The two biggest takeaways for me were:

  1. Leading companies are increasingly putting corporate culture at the centre of their efforts to build a sustainable business. Jenn Kim shared more of the inspiring Zappos story.
  2. The meme of abundance and scarcity. Technological progress is all about creating abundance where previously there was scarcity. Peter Diamandis shared a story about how in Napoleonic times aluminium was the scarcest metal known to man to the extent that Napoleon gave a banquet in honour of a foreign emperor where the foreign emperor ate with aluminium cutlery and everyone else ate with silver or gold cutlery. Since then the invention of electrolysis has unlocked all the aluminium that was previously unavailable because it was tied up in silicates and a scarcity has become an abundance. When we find a cost effective process for desalination the scarcity of fresh water will similarly turn to an abundance. JP Rangaswami also touched on this meme in his talk about the social enterprise. We now have an abundance of data which is creating opportunity in all sorts of areas, but with that abundance a new scarcity is created – privacy – and we are still figuring out how to deal with that.

Finally, I want to share a video that we saw yesterday. Regular readers will know that I’m a fan of Ray Kurzweil’s work, and in particular his predictions about the evolution of technology. I’m posting this short by Jason Silva because of the brilliant way it makes Kurzweil’s thinking accessible. The money shot comes around 1.45 when Jason describes how the cellphones in our pockets are a million times smaller, a million times cheaper and a thousand times more powerful than a $60m super computer was forty years ago. Think about that for a second and then imagine that progress in miniaturisation continuing. Hopefully it is now much easier to believe that twenty five years from now we will have computers the size of blood cells (running inside our bodies). Enjoy.

IMAGINATION from jason silva on Vimeo.

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Amazon is taking on book publishers

By | Amazon | 2 Comments

Last May I wrote that  I’m a big fan of Amazon as a business. Since then my admiration has increased – Bezos and his team continue to pick bold strategies and execute them well. The success of the Kindle Fire is grabbing all the headlines but the company is also quietly turning the book publishing industry on its head.

As you may have heard Amazon is now publishing authors directly, in competition with publishers. Just like publishers they offer advances and marketing and distribution services. Seth Godin is one of their authors. And their position vis a vis traditional publishers is strong (from Techcrunch):

Amazon’s publishing arm is surprisingly strong. They have a number of benefits including inexpensive print-on-demand as well as a massive Kindle install base. What do traditional publishers have? Well, Amazon.

There are even allegations that Amazon is consciously trying to force publishers out of business by offering leading authors above market advances that mean Amazon will make a loss on their book. Sarah Lacy explores this point in detail here.

It seems to me that ebooks and the web are changing the rules for publishing in ways that render a lot of the traditional publishing activity obsolete. Authors are able to market direct to their customers using social media and now that we can read authors blogs, book reviews and even download one or two chapters for free the ability the role of gatekeeper is less important. To adapt and survive in this new environment traditional publishers will need to shrink their businesses. In common with many other industries transitioning to digital they are finding that terribly difficult. Step in Amazon.

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Our recent £2m investment in StrikeAd

By | Announcement, DFJ Esprit, StrikeAd | No Comments


News broke last week of our latest investment – a £2m Series A in mobile advertising startup StrikeAd. As the world’s leading mobile demand side platform (or DSP) StrikeAd enables agencies to plan, execute, and measure mobile advertising campaigns at scale and with high efficiency. We spoke with a number of agencies in the run up to this investment and it was amazing how many of them have them have significant budgets to deploy on mobile, but lack the tools to execute the campaigns.

The idea of mobile advertising isn’t new any more and as many of you will know there have already been a couple of significant exits from this market – including DFJ investment Admob which was acquired by Google for $750m in 2009. StrikeAd is different from Admob and the other large mobile advertising businesses because it is not an ad network. The ad network business model is to buy inventory from publishers and sell it onto advertisers at a markup, usually without disclosing the margin they are making. Over the last couple of years on the web publishers and advertisers have started to eschew the ad network business model, preferring to connect directly via ad exchanges. Ad exchanges allow for better targeting and realtime buying which results in more efficient spend for advertisers and higher rates for publishers. This trend is now coming to mobile, and DSPs, of which StrikeAd is the market leader in mobile, provide the sophisticated software and supply connections that advertisers need to target and execute their campaigns in realtime.

So from a market perspective StrikeAd stands to benefit both from the growth in mobile advertising and from the shift within the mobile advertising market from ad networks to exchanges. My favourite stat on the coming growth in mobile advertising came from Mary Meeker’s Internet Trends 2011 presentation last October – in 2010 8% of time spent on media was spent on mobile, but only 0.5% of ad spend was on mobile. Improved devices, larger screens, and above all the growth in m-commerce will drive convergence in those figures.

StrikeAd also has a great team with a long history in AdTech. I’ve known founder and CEO Alex Rahaman for seven years now and in that time he helped grow a UK ad network called Unanimis and sell it to Orange, and also there led the spin out and finance of a very large open source adserver and exchange called OpenX. Alex and his team have been a delight to deal with since he first came to tell me he was setting up a mobile DSP and all through the investment process. Addtionally, Thomas Falk, who could well be Europe’s most successful adtech entrepreneur, provided the angel funding and is an important part of the team.

Finally, a quick word on the product. StrikeAd manages a complicated technical infrastructure that processes huge volumes of data at very high speeds. The software processes over 20bn ad impressions per month, combines them with third party data sources for targeting purposes, bids on the impressions if appropriate and serves ads if the bids win. Total round-trip time from ad impression called to adserved has to be less than 100ms to maintain a high quality experience for the smartphone user. Campaigns are targeted on a wide range of parameters, including demographic data, location, time of day, and device type, and they are optimised for a wide variety of outcomes, including click through, app download, click to call (and even click to call where the call lasts longer than a specified time). All of this is presented to the advertiser (normally via their media buying agency) in an intuitive user interface. In short, this is heavy duty software, and not the sort of thing that can be knocked up by a couple of hackers overnight.

We’re excited by the prospects for this business. Revenue momentum is strong and hopefully StrikeAd will quickly become a substantial company.

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Facebook launches ‘Actions’, driving social into everything

By | Facebook | No Comments

Facebook’s initial partners for ‘Actions’ launch

Last night Facebook announced a bunch of new partners that are using ‘Actions’, a Facebook feature which lets developers make just about any action a verb. We can now expect Facebook buttons to pop up everywhere inviting us to declare our relationships to all sorts of things by clicking buttons with verbs such as  ‘Want’, ‘’Listen’, ‘Own’, ‘Watch’, ‘Read, or ‘Pin’. As I’ve said numerous times now I think the next big wave for social is when it spreads into everything that we do to make it just a little better. I’m not talking about new sites or apps, or even necessarily spending more time on Facebook, but rather the apps we currently use incorporate social data to get better.

Ticketmaster launched a new Facebook app last night that is a great example of what can be done. Techcrunch describes it thus:

What makes Ticketmaster’s app cool is that it pulls your Facebook profile’s music app activity from services such as Spotify or Rdio, and recommends nearby concerts of artists you actually listen to, not just those you say you Like. ….

In August Ticketmaster began allowing you to tag the seats your purchase with your Facebook profile. That way friends who are deciding what seats to buy can see where yours are select ones close to you. People are a lot more willing to buy a single ticket to an assigned seat show if they can sit next to their friends. This is one example of how optimizing for the customer experience can also benefit the company’s bottom line.

Ticketmaster’s new canvas app brings the entire event discovery and ticket purchase flow within Facebook. You’re shown a feed of concerts your friends have RSVP’d to or shared that they’ve bought tickets to, followed by personal recommendations. Thanks to Facebook data permissions, it can suggest nearby events based on your Likes and listening activity without having to ask your preferences.

The brilliance of this app, and other Facebook Action enabled services, is that they make life better for the consumer without requiring any incremental effort. The automatic import of data into Facebook’s interest graph from apps like Spotify and The Guardian coupled with the one click data capture using the new ‘Actions’ are the enablers for this new functionality. Perhaps the most ingenious thing about Facebook is the way it enables such seamless data capture.

Facebook’s newish redesigns, including the Timeline layout, are an important part of this story because they separate status updates and deliberate shares from the automated shares that now come in the top right hand corner. I also think that because the timeline makes it easier to look back at what we’ve done in the past people will start to use Facebook as a personal record of where they have been and what they have done, encouraging more sharing. This was possible before, but the old UI made it too painful in practice.

Looking at it all together Facebook’s grand plan to be an important part of everything we do becomes clearer. They are, of course, doing this because the data they get enables huge advertising dollars and probably a massive increase in transactional revenues via Facebook credits (note that Ticketmaster now allows purchases within Facebook). They are also a natural monopoly – the bigger they get the harder it gets for anyone to touch them, from the perspective of user numbers, quality and depth of data, and technical sophistaction. I predict more anti-trust skirmishes.

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50 Questions: How can I tell when a VC won’t invest when they aren’t saying ‘no’?

By | 50 Questions | 6 Comments

Fourtieth in a series of (almost) weekly posts by myself and Nicholas Lovell of Gamesbrief which answer the fifty questions you should ask before raising venture capital.  We expect the series to run for a year after which we will collate the posts into a book.  You can find the rationale behind the series here, and the list of questions here.  We welcome your comments on any and every aspect of what we are doing.


Venture capitalists are notorious for not telling companies when they won’t invest, and worse, being enthusiastic about the company and the prospects of a deal for an extended period and then simply going quiet. It is unfair on startups when VCs behave like this as it wastes time (an entrepreneur’s most precious resource) and makes it harder to know when a fundraising process is failing and the company should change tack. Giving up on a fundraising process too late can be fatal for a business if it then doesn’t have enough cash left to pursue a different strategy.

I work really hard to get a quick ‘no’ to startups if we aren’t going to get into a conversation, and once we are in a conversation I try to tell them immediately if our interest cools. It isn’t always possible though. In the next part of this post I’m going to explain the dynamics that can lead to the undesirable behaviour of not getting to ‘no’ quickly enough and then I will describe some of signs so that you can tell if it might be happening to you.

The biggest single reason why VCs are slow to say ‘no’ is that for any half decent company it is impossible to be sure that ‘no’ is the right answer. Most VCs are inundated with investment opportunities and the most important day to day decision is which one to dedicate time to and if there is more than one good opportunity then one gets de-prioritised without a significant amount of work or thought. If the entrepreneur of that company then calls up the VC to ask if they want to keep looking at the deal most VCs will not want to rule themselves out of that opportunity, and will look to keep the deal alive, although realistically at this point the chances of an investment being made are (usually) already slim.

Decision dynamics within partnerships can also lead to slow decisions. If a decision is finely balanced then despite the sponsoring partner being heavily pro the deal investment committee can sometimes turn it down very late in the day (note also that many of the best investments are those where the original decision was finely balanced). Equally, in the situation where an Associate likes a deal it can sometimes take them a week or two to get a partner to focus enough on the opportunity to either run with it or kill it.

Finally on the dynamics of slow ‘no’s, it is important to note that most entrepreneurs want investment from people who believe in them and their company, and if it comes to a situation where two firms are competing then the one who has shown the most belief generally has an advantage. VCs who express equivocation at any point can face an uphill battle getting back into the deal and therefore the incentive is to be fully enthusiastic right up to the point of saying no. If a sponsoring partner is currently prioritising another deal but thinks they might come back to your company(i.e. are too unsure to say ‘no’) they are likely to simply apologise for being busy rather than explain that you haven’t made the top of their list. Equally, if a partner loves your company but faces a split investment committee they will fear that if they are open about that fact you might go with a competitor who is simply being less transparent.

By now you have probably already thought of some of the signs that suggest a VC is heading towards a ‘no’ even if they aren’t saying it.

The first, and most obvious, is that they are slow to return calls and emails and to arrange meetings. A top priority deal gets close attention. I wouldn’t give up on a VC who is slow to respond though, whilst it tells you that they weren’t immediately excited and the chances of getting to ‘yes’ are receding, it may be they simply haven’t thought about your company enough yet, and when they do they will get excited.

Secondly, look to the body language rather than the words. If there is genuine excitement about your company you should be able to see it or feel it.

Thirdly, repeated requests for more information that don’t seem headed towards a conclusion can be a sign that there is too much unease about your deal within the partnership. If during partnership discussions there is concern about the sales forecast and a request for a pipeline analysis follows, and then the following week there is concern about the competition and a request for a breakdown on the competition follows it is very possible that the following week will see a new concern, and so on.

Finally, you should look to be building a trusting relationship with your sponsoring partner and ask them these questions directly. If the trusting relationship is not forthcoming, or the answers to your questions are evasive that will tell you a lot.

Reading back through this list of signs there is nothing terribly surprising here, and, on reflection, I think that when entrepreneurs go wrong it is because they don’t want to believe the signs rather than because they don’t see them. Giving up on the chance of a transformative event is something most people find hard, even when that chance is slim, or even very slim. When the alternative is unpalatable (e.g. slower growth, headcount reductions, or even going out of business) then giving up on a slim chance is even harder. The trick, of course, is to be ruthlessly honest about the chances of success and not hold on too long.

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