Published in the San Diego Union-Tribune, May 4, 2026
by Neil Senturia
April 16: The due diligence call is arranged.
Nota bene to founders: There is always one wise guy who wants to demonstrate to the others on the call that he knows a lot — a lot of irrelevant questions about our “software stack” or how we will respond if there is a nuclear war that brings our servers down, and will that potentially cause a data leak.
Founders: Bite your tongue, be charming and agree that in the event of nuclear war, there is a significant risk to the software stack.
After the call, our inside whisperer says we did good, and as part of the due diligence, the angels are going to call our customers and ask them why they are using our software and are they happy with the product.
Nota bene to all: How stupid do you think I am? When I give you a reference to call, do you really think they are going to trash us? Sure, grill them, but they are solid (we bought their mother a new Lexus).
While we are waiting to jump the customer hurdle, a new twist. We also do the first VC due diligence call. Remember, we have an unenforceable, disappearing ink “email of intent” from the VC. Lowball offer, but look pal, it is an offer. You know about any port in a storm.
Oh, and how many other VCs have expressed interest? Please. But the technical review seems to go well, nerd-to-nerd. The VC junior associate-director-wants-to-be-partner-one day says he is excited by the possibility of a unicorn and “will send a term sheet.” Subject, of course, to a final sign-off from the Managing Partners.
The magic words — term sheet. Did I hear correctly? I replay the tape. Yup.
Then we wait. Politely wait. Patience is a virtue. The silence is deafening. Crickets. What are you guys doing, using an abacus to calculate premoney valuation? Did you maybe lose our email address? This is what makes founders crazy.
At the same time, my psychoanalyst sends me an email, says he’s done. Retired. Had enough listening to crazies. Nice timing. I will deal with the abandonment issues after we close the financing.
April 18: ABC — always be closing. The money is not in the bank, and so founders always need to press. No obvious options, but I lob in a long-shot query to another angel who twice before has told us no soup for you. I expect the same. Instead, he enthusiastically invites us to pitch in person. Might be the Artemis 2 effect.
Nota bene to all founders: There is this mystical thing called momentum. I cannot explain it. I only know that when it shows up, get on your surfboard and ride, and don’t try to explain capillary wave theory.
I am not the CEO. I am the executive chairman, and as such, I have decided to call an audible. I am implementing the famous “get out of Dodge” theory of financing. I am going trout fishing in Montana. Trust your team, and more importantly, there is no internet where I am going, so there is a significantly reduced chance of me accidentally hitting the send button or calling an investor to express my concern.
No phone, lots of fish. I return to civilization and find an email from the above-mentioned unicorn-seeking VC, who politely has told us to die and pound sand. Lots of nice words followed by, “You have no moat.” Is he referring to a castle in Ireland or our software?
“Black Dog” depression sets in. But then the company catches a break. Kudos to Connect, which sponsored the Cool Companies meet the VCs event (we were in the mix), and at that event, our CEO hooks another fish. The introductory call “goes well.”
Now, we are about to enter what is known as the “investor’s dilemma.” Lots of promises and expressions of support, but tell me true, who’s in the deal? Who is going to agree to invest first? If nobody else is committed, then my money might end up being a bridge to nowhere. I’m not going in first. So no soup for you. But, hey, if everybody else is in, then sure, I am all in. Right with you.
If everybody else is in, who needs you?
Rule No. 827: Maybe an alligator in the moat?