Zombie VCs « Danielle Morrill

This post uses publicly available data on Crunchbase and has elicited a strong response from the tech community in general. I am making corrections as I receive them and you can scroll to the bottom of the post to see a full list of my changes.

I am going to say what most investors and many savvy entrepreneurs in Silicon Valley know but aren’t saying: just as there are zombie startups, there are zombie VCs out there and they walk among us. These are partners at venture firms who are 3-5 years into investing their fund, don’t have very strong results so far, and are struggling to raise new funds. These investors are not doing new deals, opting instead to use their remaining capital to double-down in follow on rounds with their existing portfolio, but in some cases they’re taking meetings anyway.

How to Spot a Zombie VC When Raising Your Series A

In the same way at a VC will often send you to an associate because they’re “too nice” to say no, zombies will meet with you and make you feel like you’re making progress on the fundraising path, but can ultimately wind up being a huge waste of time. Since you don’t have your own associate to pass them off on, you need to watch for the warning signs yourself and ruthlessly protect your precious time. You’re here to raise money and get back to work, not make friends.

• They haven’t made any series A investments in the past 6 months
• They haven’t invested outside their existing portfolio in the past 3 months
• They haven’t made ANY investment in the past 3 months (after a more regular pace in the past)
• They tell you they’re re-focusing on later stage deals, or raising a new fund

Once you have identified that you may be meeting with a zombie it can be frustrating, but what you need to understand is that just like Bruce Willis in the 6th Sense zombies usually don’t realize they’re dead. Politely complete the meeting and update your spreadsheet accordingly when you get home. If they contact you to set up another meeting or request that you send over your deck it is appropriate to ask them how serious they are about doing new deals before you provide more information (decks get emailed around) or offer up more of your time.

If the investor seems angry with you for asking about their (lack of) recent Series A this is a red flag.

You have every right to do your due diligence on them. On to the next one.

Doing the Diligence

In my previous post, I listed the most active Series A investors, and my advice to entrepreneurs was to start by pitching investors you know are actually doing Series A.

This is a list of funds who may be doing deals, have participated in Series A in the past, but have not publicly done a Series A in 6 months or more. The data is sourced from Crunchbase and includes investors who have previously participated in a Series A investment which was publicly announced, but not in the past 6 months. It includes active institutional investors as far back as January 1, 2012 who have participating in lifetime total deals of $20,000,000 or more (to reduce inclusion of angel funds). The list is sorted by total deal participation size, to show the most well-known investors first. Some of these investors are late stage in general, so they’re probably not great to pitch for your first round of venture funding but that doesn’t mean they’re not doing well overall.

Investors, would you like to be removed from this list? Get busy! Or, if I missed something let me know about a Series A deal you’ve done in the past 6 months (I don’t need the deals, just your word). My email is morrilldanielle (at) gmail.com

Editor’s Notes: Updated to clarify that the Crunchbase data set only includes publicly announced investments.

Corrections List

I’m updating the list as I learn more from the community, updates coming soon.