Almost always, entrepreneurs come out of meetings with VC's and report "We had a good/great meeting. They said they thought what we were doing was interesting, and they'll get back to us after they talk with their partners."
In 35 years of working with startups, I don't think I've heard anything different more than a dozen times.
The problem is that, ninety-nine times out of 100, it's a head fake, and always lead to disappointment on the part of the entrepreneur when (as they most often do) the VC either passes, or, more frequently, just never gets back in touch with any feedback. It's a reliable way to know that a VC has passed if you have twice written to them without reply.
Entrepreneurs need to understand that VC's are in the "optionality" business; that is, it is their job is to maintain the option to invest in any particular startup for as long as possible. Thus, VC's learn to not say "no" until another investor does the deal (or the company goes out of business).
This isn't "evil". As just mentioned, it's their job, and they have fiduciary duties to their own investors to discharge.
But, entrepreneurs need to understand the dynamic. It's a hidden rule of the game, and, as an entrepreneur, you ignore it at your peril. Time is money and you can waste a lot of time with VC's who are never going to invest in your deal.
Here's a slightly (but only slightly) exaggerated, two-part test to see if a VC is truly making progress towards closing a financing of your startup.
- Test One: is the VC re-arranging his schedule to work in meetings with you? If they are, then that's a good, but not definitive sign, and can absolutely be a head fake. N.B., it is NOT an indication of anything if the VC is just fitting you into his schedule along with everything else he has going on (important to remember that VCs are in the business of having meetings with startups).
- Test Two: has the VC's wire transfer hit your company's account? If it has, the VC is interested. Anything short of that is unreliable evidence.
Just today, the aforementioned rule was demonstrated in my own portfolio: after a number of time-consuming meetings with several members of a VC firm (and a lot of happy talk about building the company together, etc.), the firm said they were passing. This happens; don't let it get you down.
So, entrepreneurs, gird up your loins and get ready for a frustrating process. The good news is that good companies usually get financed. The bad news is that you'll kiss a lot of frogs to find the one that is really a beautiful princess under a spell, and not just a frog.
And, you'll have lots of "interesting" meetings along the frustrating road to getting VC funding.