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I was on a panel yesterday on VC fundraising. One audience member asked how early one should start talking to VCs, and whether it made sense to meet with VC’s at all before raising money.

My friend Jeff Bussgang suggested that it’s a good idea to meet with VC’s early, to get feedback and share your plans. The idea being that the VC will get to know you better over time, see how well you execute, and you’ll be in better shape when the time comes to raise money. “VC’s like to invest in movies, not snapshots” is the common saying.

Although I’ve given a flavor of this advice before, I would caution most entrepreneurs about taking this too far. Here’s why:

1. VCs have every incentive to say this. We (myself included since I’m a micro-VC) would rather make an investment decision with maximum information and after an entrepreneur has de-risked the investment as much as possible. But we want to make sure we stay close to the company, so if there is “heat” around a deal, we can drive to a decision very quickly. Always be wary of advice if it’s also of benefit to the one giving you the advice.

2. It takes a special person to overcome prior biases. If you meet with an investor very early and they dislike what you are doing, it becomes pretty tough for most people to change their opinion even if the company starts to do very well. Because startups are unpredictable, it’s actually the rare case that an entrepreneur can say they will accomplish A,B, and C and come back in 6 months having really done those and staying on the same path. Many times, there is a change in plans, or something unexpected goes wrong and the entrepreneur learns from it. Although many investors now consider themselves students of the lean startup methodology, few actually feel comfortable tolerating a movie with a lot of twists and turns. In a way, it’s almost harder to convince a VC who has been watching the movie unfold vs one who is hearing it for the first time, unencumbered by their previous biases. I think that’s one reason why some companies have limited traction raising money in one market and then can go to another market and have much greater success.

3. Most VC feedback is the same. Seriously. Unless you are talking to someone with very deep and relevant experience in your sector (but isnt invested in a competitor) you will hear the same feedback after talking to 2 or 3 investors. It usually focuses on issues around the team, market, or product. The really tough thing is that the team is often the main issue, but the VC has a hard time giving this feedback up front. Or, you’ll hear that you need to augment you team with a particular type of person. Which is often code for “I don’t know if this CEO is strong enough to lead this company and attract great people”.

So, what is an entrepreneur to do? A few thoughts. Yes, it’s helpful to talk to some VCs. But I’d think about it in three workstreams.

1. The first is to talk to a few people with the most relevant domain experience. Get real feedback that is more than the cursory “I’m not sure if this is a big enough market”. Look for people who have direct experience with the stage you are at and the types of challenges your company will face. Focus here – it will be obvious quickly whether or not you are talking to an investor with deeper than normal insight into your space.

2. Become a known quantity. This doesn’t necessarily mean having a lot of people know about your company. But you want to develop a reputation in the community that you are a credible founder. This helps in diligence so lots of people will say “I know her – she is awesome!”. It also helps give confidence that you can get things done when it comes to recruiting, finding partners, etc. But this can be accomplished in many ways. Jason Baptiste, the founder of OnSwipe did this very quickly when he came to BOS from Florida by writing posts for OnStartups and setting up hacker meetups.

3. Figure out if you have a “do-able” deal. Fundraising is a big distraction and takes up a lot of emotional energy. I really think that only 5% or fewer of startups cross the threshold of institutional investors. But its very hard to predict whether any particular company will be attractive to a particular investor. What almost all investors can give you a sense for is whether you have at least s 50% chance or raising money if you try. You will figure that out quickly – investors will proactively call you to track your progress, first meeting will be followed up quickly with meetings with more than one partner, conversations escalate such that it’s clear the investor is doing their homework and learning about your business, etc. You want to spend as little as time figuring this out as possible. Spend more time meeting with the few truly value added investors that you could learn from, but then save most of your time building your business until it’s time to raise money.

By the way, I’d encourage many entrepreneurs to get to know Jeff Bussgang (as I did more than 3 years ago). He is value added in multiple sectors and gives non-standard, direct feedback.