From new funds popping up on a daily basis to the major players raising huge follow on vehicles, venture capital firms are raising money at an incredible rate right now. But that doesn’t mean that it’s going to trickle down. The number of deals per quarter is actually on the decline. Venture capitalists are becoming more and more picky while squirreling away treasure troves of cash for the winter.
If you’re a founder looking to raise capital right now you need to walk softly and carry a big stick, if you will. It’s all about carefully navigating the venture ecosystem and striking when ready. Here are six tips to help get access to venture capital – from the intro meeting to the partner meeting.
All investors are not created equal.
Don’t make the mistake of pitching a cyber security focused investor when you have a consumer focused camera app. Investors are specialized. And don’t bother going to their website for this information – all VC websites say the same thing about value-add and changing the world, blah, blah. Look at real data. If you’re building a media business, then you need to find media investors. And you should know every media biz that has come before you, so start there.
For example, let’s say you’re in NYC looking for capital and you’ve identified The Dodo and PopDust as comps. Search them both in the NYC Innovation Economy map and you’ll see their common investors. In this case it’s RRE. Start with RRE.
Now that you’ve identified RRE as a target, you need to know everything about RRE. And there’s no better place to look for info than the founders at their current portfolio companies. Head back to the NYC map and search RRE. On their profile you’ll see a long list of investments. Start by chatting those founders and gather as much info as possible about the partners.
Get used to the no.
What was that saying about doing the same thing over and over again and expecting a different result…? Never mind, get used to it. The no’s should fuel your fire and expect them to reach the high two and sometimes three figures. It’s this persistence that separates the winners from the losers.
Warm intros are king.
The first litmus test for any investor is whether or not you can actually get to them. Don’t waste any time with cold emails or stalking them at events if you haven’t met them. You need a warm way in.
Good news, you’ve already done a ton of that research in bullet point number two. Intros from portfolio founders are perfect. Better news, we have at least one VC and a few angels every week hosting office hours that are looking to connect. In fact, we’ve already had an investor from RRE as a host, among many others. Check out the list of upcoming investor office hours and get ready to connect. This is proven, case study later.
Numbers do the talking.
Now we’re into the nitty gritty of your pitch. From the market size slide to your financial model, you need to know your numbers – projections and even traction – inside and out. VCs are going to ask about them over and over again to ensure that you know the business and market – and maybe even try and slip you up. And it’s very clear when the answer should be numeric and you respond with a random string of words.
At the end of the day, execution is the only thing that the investor is looking for. Ideas come and go but they really need to know if you and your team can execute this business at all costs. Startups are not for everyone and most don’t have what it takes to execute a launch, but if you think you do, then your investor needs to know that above all else. Sell yourself and get ready to work.
If you’ve made it this far, I’d love to go into more detail. Chat me live on VentureApp today.