63. The Fast No, Part 1 (Mike Collett)

The Full Ratchet Podcast on iTunesNick Moran Angel List

Mike Collett of Promus Ventures joins Nick to cover The Fast No, Part 1. We will address questions including:

  • Mike Collett The Fast NoCan you start off by walking through your background and how you became involved in venture capital?
  • This has come up in previous episodes but can you start off by refreshing us on what an investor means by the fast no?
  • Can you take us through a common scenario where an investor drags out the process?
  • Clearly this can result in a waste of everyone’s time… can you talk a bit about why the fast no is so important for all the stakeholders involved?
  • We just had Semil Shah on the show talking about the path to series a and the topic of rolling raises and stacked notes came up… what’s your take on this?
  • What, in your estimation, is a reasonable amount of time to get an answer to a startup and does this change based on the stage of investment?
  • From an investor’s standpoint, how can one speed up their eval process and get definitive answers to startups in a more timely manner?

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  • Seph

    Starting @21:30, Mike Collett:

    Don’t have unrealistic price expectations. I will say that in my experience, the best founders we have worked with made sure that valuation was lower than market. And that is a crazy thing to say, but what they want is to make sure that no one has a problem with it. And they are smart enough, because they have been there before, to realize they don’t know how long it is going to take to get to the next stage. And if it takes a whole lot longer than they think, or there is something exogenous that goes on in the environment… they certainly want to be sure that they are going to be able to raise money not at a down round… [The] world today gets caught up in making sure you can get a big [valuation]. Take what the market gives you… If you get ahead of yourself, you are going to pay for it, and it’s going to make raising money very difficult, and good people spend an enormous amount of time trying to get out from underneath that. So don’t have [an] unrealistic price… Be smart about that… The best founders care far more about who is coming in.