After money, time is an entrepreneur's most precious resource.
Because entrepreneurs are genetically programmed to spend time talking to any prospective investor who shows the slightest interest in their company, this can occasionally be a problem. Sometimes, entrepreneurs in early-stage companies will get emails or phone calls from people who identify themselves, not by title, but something like "...I'm with a well-known venture capital firm called "X", and I'd love to hop on the phone and find out more about your company."
An real-life example recently received by one of my "Sherpa" companies (names redacted): "Hi, I work at __________, which is, as you, no doubt, know, a very well-known, early stage VC - we are one of the leading investors in ________, _________, and ________ [lots of relevant and successful companies]). I’ve been following the press regarding [your startup] and would love to hear more about your [current offering], as well as your plans for the future of the business."
What could be better than this?
After all, entrepreneurs mostly spend their fundraising time and effort fruitlessly scrounging for meetings with investors, most of whom don't even bother with a reply after a meeting (if you're lucky enough to get a meeting). Yet, here's someone at a reputable firm actually reaching out to me!
The problem is that it's a head fake.
Here's why: many larger "venture" (really small PE firms), particularly NYC-based ones, have armies of Analysts and Associates whose job it is to do research, and, in that connection, to cold call lots of interesting early-stage companies. It is always a good way for them to get educated, and almost always a total waste of the entrepreneur's time.
It is a sure thing that any firm that has Analysts and/or Associates to reach out to an early-stage company is too large, and late-stage focused, to be interested in a financing round smaller that $10 million - $50 million. They will, of course, prevaricate and say that they are – but they simply aren’t, and can’t do it as a matter of business model discipline.
Moreover, if you have the right kind of folks helping your company, there are no firms of the caliber you would want to have as investors to which you won't, “around the table”, have access at the senior partner level. If you don't, spend the time to find someone with those connections. Analystst and Associates, almost never have the "juice" to move a deal through a big venture partnership. Not their fault; just the way the world works.
So, if you receive such an email, always check out the writer on the web site. If it says anything other than Partner, General Partner or Managing Director (or,sometimes, Principal -- in some firms, Principals can lead deals, sit on boards, etc.) best to write them something like:
“Thanks for the note, and we appreciate the interest. When we are ready to do a financing in which [your firm] would be interested, we’ll be in touch with [your firm].”
If it does say Partner, General Partner or Managing Director (or Principal), then you may be in luck. It sometimes happens -- in my experience, about once every 3 - 4 years in my medium-sized portfolio.