Adventures in building a news search startup Part 3

Part 3 The VC Tour

Part 1 Adventures in building a news search startup – Skunkworks project

Part 2 Adventures in building a news search startup – Upping our game

The next thing we did was compile a list of investors we thought might be interested based on their investment profiles. We also asked friends for warm intros to investors they knew. We ended up with a bunch of meetings. We met with one top-tier VC firm on Sand Hill Road and then a variety of other investors. One person was early Yahoo and had made a ton of money and then gone into investing. Another was a VC firm that was quite big and prominent, not the elite top tier, but close.

One early discussion was with a firm in New York that a friend of mine who is a successful tech founder had connected us with. They gave us this response, which I think is quite common.

“Sounds really interesting. Come back to us when you have a lead investor and we would be interested.”

At the time we were heartened by this encouragement, but then we realized the challenges of getting a lead investor and that it’s a game. The smaller VC’s are all waiting to see who the big VC’s invest in, and then they try and jump on board.

One Silicon Valley VC who invested in many online startups, replied to the warm email intro from a friend of mine by declining to meet, stating that he does not invest in search and discovery companies. Ouch, even though that was not specific to our efforts, it hurt that he invested in things not too far off from what we were doing, yet had a broad brush policy against discovery products.

The meetings we did get followed one expected line of discussion and two that caught me off guard.


  • Looks interesting. Come back when you have more traction. This was chicken and egg – our perspective was give us some money so we can scale. Their perspective was get user traction and then we’ll give you money.


  • Your team is too small. Nobody really came outright and said this. But we figured it out. We thought it was a great plus for us that we had built our prototype with three people and could scale it massively with just a few more people. Turns out, VC’s want a big team for something like we were building because then an acquisition became a meatier thing and would provide much better investor returns. They put a multiplier on each person acquired.
  • How is this like Pinterest? At the time, Pinterest was the flavor of the month in Silicon Valley. I think every single investor we talked to mentioned Pinterest because it shared a social component with what we were building. This caught us off guard at first, but we adapted and talked about how easy Pinterest integration would be.

There was also lots of questions about how SNN would be good for tablets and mobile. To us, putting our simple UI on a table or mobile was trivial, but to VC’s they didn’t believe until they saw it.

In the end, we got no investors for some of the reasons above, and surely other reasons as well. It’s hard to get user traction on yet another news discovery platform unless you can survive long enough to be acquired. By going lean, we realized our dead end pretty early and were able to step away.

My advice to product people and engineers who are seeking VC money is to expect the unexpected. VC logic is different from what you may expect.

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