My name is Spencer Lazar. I am a venture capitalist at General Catalyst. I grew up with the internet, spend my life thinking about how it can make our lives better, and work with world-class entrepreneurs to affect that chanage. NYC is my home. This is my blog.

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Passing on People

In the venture business, most of the opportunities we see, we pass on.   As a general rule of thumb, for every 1000 investment leads, you want to meet 100.  For every 100 you meet, 10 turn into deal-oriented conversation.  For every 10 that get that far, 1 turns into a deal.  There is nothing magical about the funnel, things just seem to work out that way.

There are tons of good reasons for passing (market size; defensibility of IP; absence of operating excellence - to name a few).  But there is one legitimate justification that you will rarely see or hear explicitly from an investor - passing due to a lack of faith in the people behind the given project.  

This predicament is not unique to venture.  In dating, the phenomenon is commonly expressed as "its not you, its me." In hiring, every once in a while, you will hear prospective employers say that things did not work out because there wasn't "a good fit." But, most of the time in venture, you do not even get that much. Why?

Entrepreneurs are one of the most impressive groups of people in the world.  I would not do what I do if it weren't for the fact that I get to interact with so many of them so frequently.  What makes them particularly special is their passion for what they are doing.  Instead of working in traditional settings with benefits, job security, and a tried-and-true career trajectory, entrepreneurs go their own way to solve perceived problems with the way to world works.  They will stop at nothing to see them fixed. Deal or no deal, a part of me always leaves meetings in awe.  

When someone is reaching for their proverbial dreams, it feels almost cruel to tell them that the reason you believe they will not succeed is intrinsic to them.  Instead, one typically hears camouflaged rationales steeped in common pitfalls (back to things like market, IP...).  When businesses have meaningful operating history, sometimes we fall back on a lack of comfort with imperfect business metrics.  At least then, the investor preserves optionality down the road, in the event that the entrepreneur someday matures into a marked success.  

I try to be as transparent with people as possible.  As passing on people will forever be a challenge in my life, I would be curious to know how you (entreprenuer, investor, or otherwise), handle this predicament.  

Just like in dating, a pass from one person is not a reflection of the market.  It is reflection of that person's indeosyncricies, standards, and outcome expectations.  If you are as passionate as most of the entrepreneurs that I meet, you will find funding from someone, sooner or later. 

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