Jan 25 2007

Should We Talk To VCs If We Aren’t Interested In Raising Money?

Question: We’re a profitable bootstrap NOT looking for institutional funding. Periodically we get inquiries from VC associates. Is there any reason we should or shouldn’t talk to them? Assuming they have plenty of deal flow, and we haven’t been introduced, why would they even bother?

Our Take: If you are profitable bootstrap company and people know about you, there clearly will be outside interest to get “in the deal.” I’ve seen a few deals like this where they get a “hot” label and everyone starts calling and trying to figure out if the team is taking money. Why they bother is that associates are normally trying to prove their worth, create their network and not let any good deals get past them. It might be a real coup if an associate could get your deal in front of one of his or her partners and look good. As for speaking to them, if you really never intend to raise money, then the only reason that you’d want to meet with them is for the free business feedback. If it’s possible that one day you’ll need expansion capital, you might want to start cultivating some relationships. Whether or not these folks have enough deal flow isn’t really the question (although firms that have less deal flow, certain make unsolicited calls more often), rather there aren’t a ton of profitable companies looking for VC money.