Marc Andreessen: “When The VCs Say ‘No’….”

🌈 Abstract

The article discusses the common misconception that startup founders should pitch to as many VCs as possible to secure funding. It emphasizes that if multiple VCs say no, it's a sign that there is something wrong with the founder's plan, and they should instead focus on refining and retooling their plan rather than continuing to pitch to more VCs. The article introduces the "onion theory of risk" and explains how founders can systematically reduce the layers of risk in their startup to make it more fundable.

🙋 Q&A

[01] Pitching to Multiple VCs

1. What is the author's view on pitching to many VCs?

• The author disagrees with the common advice to pitch to as many VCs as possible, stating that if multiple VCs say no, it's a sign that there is something wrong with the founder's plan.
• The author suggests that instead of continuing to pitch to more VCs, founders should focus on refining and retooling their plan.

2. Why does the author think pitching to more VCs after getting multiple "no"s is a waste of time?

• The author believes that if you meet with 5-6-8 VCs and they all say no, it's not a coincidence - there is something wrong with the plan that needs to be addressed.
• Continuing to pitch to more VCs after a bunch have said no is likely a waste of time, as the fundamental issues with the plan have not been resolved.

3. What does the author recommend founders do instead of pitching to more VCs after getting multiple rejections?

• The author recommends that founders should "retool your plan" - i.e. continuously refine and improve their plan based on the feedback and insights gained from the previous pitches.

[02] The "Onion Theory of Risk"

1. What is the "onion theory of risk" that the author introduces?

• The author describes the "onion theory of risk" where investor risk in a startup investment can be seen as layers of an onion that need to be peeled away one by one.
• The founder's challenge is to keep peeling away layers of risk in their startup until the VCs say "yes" and the risk is reduced to a level they are comfortable with.

2. What are the different "layers of risk" that the founder needs to peel away?

• The article does not explicitly list the different layers of risk, but states that the "key is to make progress, build product, and continuously peel away risks to optimize chances of securing fund."

3. How does the author suggest founders should approach reducing the layers of risk?

• The author advises founders to "Adapt, refine, and repeat until you hear that coveted 'yes'!" - i.e. continuously work on reducing the different layers of risk in their startup plan.