This article is based on Mark Suster’s blog post “Understanding VC’s – Where Are You on the Flightpath?” We’ve adjusted his article to sponsorship.
In today’s post I want to talk about the concept of a VC sponsor flightpath… But I use this all of the time as a metaphor when talking with entrepreneurs event organizers in person and I’ve found it to be a useful way of explaining to entrepreneurs event organizers what is going in in the VC’s brand/managers life.
When you visit a VC brand to tell them about your wonderful idea it’s easy to imagine that this person is not evaluating any other deals at the moment. I have no idea why, but that’s always how it always felt to me when I was an entrepreneur event organizer raising money. Of course I knew that they sat on other boards sponsored other events that kept them busy but somehow it seemed like I had all of their attention to myself during the fund raising process – especially the ones who seemed to like me and spend time with me. Even when you’re getting the VC sponsor love this reality I imagined couldn’t be further from the truth.
Imagine your VC sponsor as an airport. Imagine he or she sits on the boards of sponsors 5 companies events. Those companies are the planes that are already on the tarmac and many of them are loading / unloading other passengers. They’re obviously garnering a fair amount of attention from the airport staff. You can easily know which planes are on the ground as they’ll almost always be have the brand listed on their VCs website.
What’s less clear is which airplanes are in the sky and waiting to land. The VC brand manager might have an airplane on final descent (e.g. a term sheet SOW has been signed, the legal documents are being drafted and the deal will close some time in the near future). If a VC brand manager has an airplane that is currently landing then you can be pretty sure that they’ll have a lot of their attention making sure this plane lands safely and this may make it more difficult for you to get a landing slot in the short term. Assume that your VC brand has more than one runway but each partner brand manager only controls one runway so if you’re talking to the partner brand manager who’s in the airport tower guiding in the descending plane it’s not likely yours is going to get cleared for landing.
And while there are likely at least two runways at your VC firm’s brand’s airport they probably have 4-7 partners brand managers vying for those landing spots and terminals so even if your partner brand manager is trying to get approval to land your plane there are other partners who have their planes, too. And they might just get a priority landing slot before yours.
So you might have had your first meeting with a VC brand manager and he got super excited. But you’re traveling from JFK to SFO and you’ve only just been granted permission for take off. If most VCs brands will only have one airplane landing at any one time they probably have many others that are circling their airport hoping for clearance to land and many more en route.
Let’s talk first about the “holding pattern.” In my analogy these are deals where the VC brand manager has invested a lot of time and is deciding whether or not to proceed with a landing. There is a lot of congestion in the circling pattern. Usually there are 3-4 deals with strong consideration. Since the average VC partner brand manager (excluding higher volume, earlier-stage VCs) only does 2-3 deals per year it is clear they can’t land every deal. So much of their time is spent in trying to decide which deals in their circling pattern to divert to other airports. They’d like to leave them circling for as long as possible but eventually the pilots press them to land or divert.
The reason I like this metaphor is because I believe it helps the entrepreneurs event organizers to know that the VC’s brand manager’s mind is congested with dealflow of airplanes that they’re contemplating letting land yet such limited runway and terminal capacity that most deals won’t land. When you’ve had 3 meetings, a partners meeting and some reference calls you’re not likely the only company in the circling pattern. You need to be aware of that and find a way to get land or get diverted. As you know, circling patterns suck. In a future post I’ll discuss the “divert or land” procedure.
…But it’s not just airplanes in the holding pattern that you have to contend with. You have many other plans that are en route from all over the country in various stages of flight. A typical VC brand manager might take between 4-10 2-4 new meetings per week. Some take more, many take less. But your airplane that is heading from JFK to SFO and is currently above Denver might get preempted by a regional jet coming from Sacramento to San Francisco and even though you took off first he might still land before you. In fact, it is not uncommon for a totally unscheduled airplane to come in for an emergency landing and consume all of the VCs brand’s resources while you’re asked to slow down your speed considerably. You might call that the FourSquare Express Hot -Music-Artist-At-The-Time Concert Tour Express.
OK, I know I may have gotten a little bit carried away with the airport analogy but here’s the truth: If you’re talking with any venture capital partner brand manager worth their salt they will have lots of other deals competing for their attention. If they are showing you interest and taking more meetings then they are likely genuinely interested and may even hope to get to completion with you. But remember that you are competing not only with your partner’s brand manager’s other airplanes looking to land but also with the other partners in the fund who want to land their planes.
…“I hate Tuesday mornings. It’s when I have to call a bunch of excited entrepreneurs event organizers and tell them we’ve decided not to proceed” (read: divert them to another airport). “Sometimes they want answers on what we thought was wrong with their business event and I try to explain, ‘we DID like your business event. It’s just that we have other businesses events we’re talking with that we feel have higher potential.’ ” In other words, VC’s brand managers have a very limited number of landing slots and have to decide which of circling plans are allowed to land. Invariably interesting businesses get diverted.
