The Do’s and Don’ts of getting your foot in the door of a Venture Capitalist

We all know how hard it is to get in front of a Venture Capitalist even if you’re sitting on the next Google. I gave a very brief How-To in my previous post about approaching a VC you don’t know; but this time let’s walk through a step by step guideline.

The Do’s

1.    Introduction by a lawyer. Best case scenario, they work for a firm that does a lot of Venture Capital financing. Having a warm introduction, especially by a law firm that works in the space is essential. If you’re the next Google, try to land that firm that has the connections and is not simply a divorce lawyer.

2.    Introduction from a professor. You might not know the most well connected law firm in the city but you most likely went to College and know of a few professors who could pick up the phone. Professors in the fields of Engineering and Entrepreneurship are your best bet; get them to understand the technology and what you’re trying to accomplish then let them reach out. You’ll be surprised at how well some professors are; easy check, take a look at their LinkedIn connections.

3.    Introduction from by a portfolio company of the VC. Browse through their site and find companies they have funded or are currently supporting. Based on those firms, you might be able to reach out to a few people and get a successful company to make the introduction. It’s all about credibility and proving success. VC firms do not like to waste their time and therefore always look at the credentials of the people requesting a meeting then look at success; without the former you won’t get in.

4.    Introduce yourself. If you can’t tap into any of the previous connections/people to get your introduction; it’s all on your shoulders. Reach out via email or phone but make sure you have a clear message: Opportunity! Your job now becomes to show that you’re credible and have the opportunity to become the next Google. Have concrete numbers: “We’ve built a site and are attracting 200,000 users per month and an average ARPU (Average Revenue per User) of $30” They won’t read the email unless it’s worth sharing.

5.    Be brief.  When you introduce yourself make sure that your email does not exceed 3 to 4 paragraphs! It should address the following points:

-    The objective of your company
-    The problem your solving
-    The specialty of your technology/marketing/expertise that is different from your competition
-    The team

6.    Check the VC firm. Make sure the firm that you are approaching, is in the right space. For instance if you developed the next Google, don’t contact a VC that only invests in bio-medical devices; do your homework! Show synergies between their past/current portfolio companies and what you’re trying to accomplish.

The Don’ts

1.    Attach a PowerPoint presentation. Even if you follow the 10/20/30 Rule of creating a PowerPoint. Make sure you hold off until you meet face to face. A presentation does not tell the story, you do!

2.    Provide extensive financial projections. If you talk to anyone in the industry, they will tell you that almost every financial projection is fluff, so don’t waste their time or yours! Frankly, I wouldn’t even include it; you’ll will either come in too low and be uninteresting or too high and look foolish.

3.    Use the word ‘Patented’, more than once. Filing a patent or provisional patent does not make your technology bullet proof. Want to know the difference check out Provisional vs Non Provisional Patents from Startup Nation. The VC just wants to know if there is any Intellectual Property that can create a barrier to entry for other competitors.

4.    Brag about your degree. Don’t make it a point to say that you graduated from Wharton; most likely the people you’re talking to have two degrees from there. Let your work do the talking.

5.    Claim that you’re in a multi-gazillian market. These days almost every company, yes even Facebook is a multi-billion dollar company; thanks Microsoft! You will most likely find a study that can illustrate that your market is massive so just stick with the facts.

6.    Illusion of other Interest. Many companies state that Sequoia or Greylock is extremely interested and has an offer on the table. If there is an offer from either firm; take it. Don’t try to BS your way of gaining interest; they will see right through it.

If you have any questions/comments, please post it or send me an email.

Ashkan
Ashkan@GreenhornConnect.com
 
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