VC Minute: SHITS

By March 21, 2021Startups

Let’s talk about the SHITS.

Nothing like potty humor to get your attention. In all seriousness, SHITS is an acronym I heard along the way that perfectly describes the VC slow roll. It stands for Show High Interest Then Stall. This is a legitimate venture capital strategy, even if unintended. It’s less effective in coastal fast-close environments, but still happens with great frequency throughout the country. 

The rationale behind this, from the VC perspective, is that before I write a check time is my ally. As soon as I write a check, time is my enemy. The longer I’m on the sidelines the more information I get: the more I learn about you, your company, competitors, traction, and team. I may be genuinely  interested but if there is no immediate need to commit to a round, I’m going to sit on the sidelines, and wait, and watch. 

When an investor has conviction they will give you a firm no, a firm yes, or even a conditional yes, such as “as long as we can hit our ownership percentage, we’re in whenever you get a lead.”

Unfortunately, the most likely scenario and one you may be accustomed to getting is the SHITS. This is not the mark of a bad investor, just one that lacks conviction about your opportunity. You can’t force conviction, but you can drive action. 

You can drive action to a decision in a few ways. First you can ask direct questions about what it takes to get to a “yes.” Next you can show additional interest in the round—and I’ve talked about this in previous episodes. When a round is coming together I need to know if I’m going to get off the sidelines and get in the game, or pass altogether. And finally, you can drive action through deadlines. There’s nothing like a deadline to get people to take action—on anything.

When you have enough interest, including from VCs giving you the SHITS, set a deadline and start pulling the round together.

Listen to the whole episode here:
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