By Fernando Berrocal
Getting financed by a venture capitalist (VC) is regarded as one of the more difficult paths towards startup funding. These bankers are inundated on a daily basis by pitch decks and e-mails, often from all over the world. As a result, VCs are notoriously difficult to get in touch with. Many believe that meeting with VCs is a matter of chance or circumstance; whether or not you have the right connections (in that market) to connect with one.
Without an introduction, entrepreneurs can spend months attempting to get through to one single venture capitalist. By changing your technique, however, you may be able to land the connection your startup needs. Here are the top tips on how to get that crucial meeting–and secure funding for your fledgling business.
- Make sure you finish your assignment.
Venture capitalists have a long list of startup entrepreneurs waiting to meet with them at all times. Many of these entrepreneurs are competitive, capable and have solid business strategies. Regardless, VCs are human beings with only so many hours in the day; a limit remains on how many meetings can be scheduled. Since their time is money, they must be highly selective regarding who they meet with.
Thus, start all communication out on the right foot. Mindless mistakes when contacting a VC - poor word choice, misplaced punctuation, spelling errors - demonstrate a lack of attention to detail. This is not a desirable attribute to highlight in the pursuit of funding. So, individually research every venture capitalist you wish to contact. Personalize your messages to all of them. As a rule of thumb, you should be able to respond to the following four questions about each VC:
- What business sectors do they usually invest in? The more their interests align with your startup’s mission, the more likely they are to request a meeting.
- What stage of a business do they invest in? Since some venture capitalists invest in mature organizations rather than nascent ones, there's little use in approaching this type of VC right now if your business is just getting started.
- What part of the world do they invest in? Even though work habits around the world have shifted as a result of the pandemic, some venture capitalists still favor physical businesses that they can visit in person–in nearby regions.
- Who is in their portfolio? Research the VC’s previous work. Have they made investments in organizations that are very similar to yours? Can your concept benefit from another organization in their network? Conversely, consider whether or not that existing business would be a potential competitor to your startup. In such circumstances, it is unlikely that the VC will have interest.
- Concentrate on personal introductions.
Venture capitalists are not isolated. They each have networks of advisors, entrepreneurs, economists, and lawyers, not to mention their industry peers: other investors. Reaching out to mutual contacts can sometimes be more effective than trying to find a direct line to the VC. If you can be introduced and recommended by someone they know and trust, you'll have the competitive edge in landing a meeting.
On the subject of personal introductions, establishing your own peer network of entrepreneurs is an equally worthwhile endeavor. Other startup founders and CEOs will have been through similar struggles. They may be able to provide you with insider knowledge on an individual investor's personality, giving you an advantage over the competition. Who knows? If you establish a good rapport - and they have confidence in your concept - a fellow entrepreneur may connect you with their own investors.
- Make a teaser deck
Don’t attach an investor pitch presentation (with twenty slides) to an introductory email. Instead, make a “teaser” deck that is under eight slides. Focus on the first slide–this guarantees they will read the rest. The teaser deck needs to provide just enough information to determine whether or not you're worth asking for a meeting.
- Move fast.
The moment you begin fundraising, the clock starts ticking. If an investor notices that you've been attempting and failing to raise money for over six months, they will have concerns regarding the viability of your startup. Avoid this dilemma by waiting to formally launch your round. For example, starting a raise in mid-November (with winter holidays on the horizon) is a bad idea. Instead, contact investors on your B-list (or below) for informal meetings and suggestions. The new contacts you make and the pitching practice you acquire from these meetings may surprise you. Save your top investor wish list for when you're ready to take that step–and the timing is right.
Keep these points in mind as you set out to land meetings with venture capitalists. With careful planning and strategic communications, your startup will have the best shot possible at getting funded.
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