2006-06-01 Randall Lucas About a month after starting to work for Voyager Capital’s investment team, I started noticing a different kind of spam email than I had ever received in the past: business plan spam. This problem — probably fairly unique to VCs (and possibly high-profile angel investors) — exhibits many of the same characteristics as “normal” spam: – Sending these spams, on a per-recipient basis, is cheap or free to the sender. There are ~ 700 venture firms with Web sites in the US; scraping or guessing the addresses of people at those firms is fairly trivial (remember, most of these spams are from ostensibly “cutting edge” software companies; writing a screen-scraper is a before-lunch type of project for a competent programmer). – Receiving these spams imposes a cost on the recipient. VC is already an ADD-riddled industry; it would only be humane to respect what little concentration and attention your average VC has left. – The senders acknowledge that the “payoff” event (making a sale, or in this case, securing an investment) is exceedingly rare, but figure that at so low a cost, it’s worth it even at a tiny payoff probability. – For a product or business plan, being advertised in a spam email correlates remarkably well with being low quality. In addition to these similarities, there are a number of other characteristics of business plan spam, some of which make it more pernicious: – Business plan spam is eerily closely targeted. For one thing, there are only a few thousand VCs in the US, so it’s kind of like some stranger knowing that you were born in a particular small town. For another, many of these spams manage to include the recipient’s name, in a pseudo-personalized way. Business plan spam is just anonymous enough to be disrespectful, and just personal enough to be unsettling. – The VC community this spam targets is small and runs on personal relationships. Offending a colleague or possible business partner in this small world is a big deal. Since it is possible, though unlikely, to misinterpret an email as unsolicited, and since accusing someone of spam has the potential to offend them, I believe VCs are loathe to reproach senders of business plan spam. (Much like the spammers themselves, VCs are faced with a low probability but high [negative] payoff event of offending a legitimate referral.) – Oftentimes, perhaps because the senders of the emails are poorly indoctrinated with good Internet culture, they think that they are behaving within appropriate norms. This leads to a number of behaviors, such as being very free with the number of emails they send, and taking umbrage at the lack of a prompt reply. Finally, further complicating all of this is the fact that sometimes (though rarely), a business plan that might otherwise be judged worthwhile, if referred through a trusted channel, comes in through the spam channel. Admittedly, it is unlikely that a partner-level VC would remember a spammed business plan well enough for it to hurt the company’s chances of funding. However, associates, analysts, or gatekeeper support staff who may have had to deal with a spammed business plan (sometimes repeatedly!) could have a lot to do with those chances, and annoying them is therefore bad practice. Entrepreneurs should keep in mind as well that “hired guns” for fundraising have a wide range of levels of quality and soundness of practice; I’d estimate that nearly half of the business plan spam I receive is from a paid fundraiser rather than from a company principal. My reason for explaining all this is by way of introduction to another document I feel needs to be written: a respectful explanation of why spamming VCs is a bad idea, and some constructive suggestions on how to approach them (us) through channels that ultimately work better for both parties.