Getting funded and how to approach VCs for investment is often on every startup founder’s mind. Nic Brisbourne, managing partner at Forward Partners, shares his advice on how to approach tech investors.
In my role as a VC investing in very early stage startups, I’m lucky to meet aspiring and established entrepreneurs every week and have been doing so for over 16 years.
A big part of the job is being pitched to, which is an element that I love – it means I get to meet an incredible variety of people and businesses.
I also enjoy the intellectual challenge of adapting to each business and the varying styles of different entrepreneurs.
A well-executed proposal by a passionate founder who has a revolutionary idea is obviously the holy grail. What sets great pitches apart are those that feature well-thought through plans for big markets, presented with passion and humility.
In my role, I’m often asked about bad pitches and more specifically, about the biggest mistakes entrepreneurs make whilst trying to secure funding from angels and VCs. I’m of the opinion that whilst there are no set faux pas, as each meeting is as different as each entrepreneur, there are definitely factors that can leave the meeting feeling flat, stunted or reveal an idea has been ill considered.
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The main funding roadblocks to avoid are those which will prevent you from landing your message as effectively or as fully as you need to.
I always view pitch meetings as the first telling of the prelude to a hopefully compelling and ever-growing story. If the prelude falls flat or focuses on the wrong elements of the story, convincing someone to stay with you for the rest of the book will be challenging.
The first approach
The first hurdle that many entrepreneurs fall down on is the initial contact made with an investor. Introducing yourself and your business to a relevant VC sounds straightforward, but the way you engage a VC says a lot about your entrepreneurial style.
A cold approach via email may get the basics about you and your business across, but it will also put you in an inbox alongside many other people doing the same thing.
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My advice would be rather than emailing a VC out of the blue, try and make a more personal connection. Do you share a contact who may be able to facilitate a warmer or more organic introduction? Can you attend a networking event at which the investor will be speaking, then introduce yourself in person?
Some of the most impressive email approaches I’ve received have been utterly engaging because they don’t pitch at all, well not at first at least.
These type of approaches first engage on an interesting industry debate or sometimes offer insight on an issue or challenge that I’ve mentioned on social media. Only after we’ve struck up an email conversation does the pitch come, which is a really smart way of setting yourself apart from the crowd and creating chemistry.
Following a VC on social media is a great way of getting to know more about what they’re interested in and focused on at a given time and is also a good way of judging if there may be common ground between you.
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The human connection
Fundamentally, a pitch meeting is like a job interview; it’s about demonstrating that, as well as having the skills to do the job at hand, you’re also a good person to work with. As well as showing the strength of your proposal, you should prioritise building genuine rapport and finding common interests to chat about away from your slide deck.
Too many people enter the process viewing VCs as corporate robots, but we, as much as anyone else, value working relationships. We want to get excited about problem solving and working alongside a founder to build something great.
Being unprepared for your pitch is a wasted opportunity, as there will most likely be a fairly limited number of relevant VCs to meet with, so it’s important to make the most of each opportunity. Come prepared with a strong presentation showing that you have thought through the fundamentals.
Know the detail and be prepared to get those listening as excited about it as you are. Know your story and why you think the world needs your product or service and practice telling it so that you can identify any areas which don’t work or sound clumsy.
As well as perfecting the story around your business, make sure you are also well versed on the finer details to bring credibility and weight to what you’re saying.
The amount that is right for your company is generally an amount that will take you six months past your next financial milestone, so stick to that.
Pitching the amount you think fits the investment size of the VC you’re talking to is putting the cart before the horse and will either make you look bad or your company will end up with the wrong plan and the wrong amount of money.
Once you’ve pitched, give the VC time to digest your proposal and come back to you in their own time. Don’t let your keenness to progress turn you into an email spammer.
The daily calendar of a VC team is often hectic and it can take a varying amount of time to get all decision makers around the table to agree on the next steps for a potential investment.
Allow a week or so to pass and send a quick note rather than calling – the ball is then firmly in their court. I always get back to emails, but some VCs don’t and that usually means they aren’t interested.
Console yourself with the fact you probably didn’t want to partner with the sort of person who doesn’t return emails anyway!
Above all else, demonstrate your passion, take a considered approach and show you are driven and hungry to build a large scale enterprise.
Most of all, prove you’re in it for the long haul and are prepared to commit the significant time and energy it will undoubtedly take to achieve success.