Show me the Money ! aka surviving your First Venture Capital Meeting

Business model, pitch deck, networking… You have been working for the past few months on having the most exhaustive documentation […]

Published on June 7, 2019

Business
model, pitch deck, networking… You have been working for the past few
months on having the most exhaustive documentation and best story and
finally have meetings with Venture Capital Firms (VCs). The stakes are
at their highest and you don’t want to squander the opportunity; what do
you need to ace this meeting and maximize your chance of getting funds?

The
following article will give you an overview of what you need to catch a
VC’s attention and maximize the face time you have with the investment
team.

Know your audience

VCs
come in different sizes and forms; each one has a unique investment
mandate and different requirements; approaching each VC meeting the same
way is a recipe for disaster.

Know
what the VC you’re meeting looks for; check their website and any
documentation on them in order to know their focus areas, see their
portfolio companies and investment preferences.

Another
important component of VCs is their people, identify the team’s
background and decision makers. Some VCs have a collegial approach where
an investment must pass with the majority of the team no matter the
seniority, while others have one decision maker — the fund manager or a
partner.

Be courteous and humble

The
ratio of startups to VC is very high, meaning you have to tick the
right boxes to get funding while considering that a VC might screen a
dozen startups before making an investment. The competition is intense,
and the outcome is not guaranteed.

First
impression is key, and nothing turns off an investor more than arrogant
founders who say they have many investors already lined up. Regardless
of the legitimacy of a startup, VCs put a lot of focus on the team and
the founders’ character. The transaction leads to an ultimate
partnership and both VCs and startups should be able to communicate
efficiently during the company’s lifecycle.

Have a good pitch and structured approach

Let’s
be clear on one universal truth in the entrepreneurship ecosystem;
there is no one-size-fits-all approach. Every VC will have criteria they
favor, however having an organized pitch and structure increases the
chance of having favorable returns.

It does not matter if you have the best-looking presentation or the longest pitch; a good structure conveys a better message.

The best and most important ideas to circulate are the following:

  • What problem are you solving? Why is it relevant?
  • What is the solution you are providing and does it work?
  • Is there a market for your idea? Where is it and what’s it potential?
  • Is your idea unique?
  • If yes, can you implement it and sell it?
  • If not, what gives you an edge over other copycats?
  • How do you generate revenue and grow? You have to have a concrete plan on selling your product/service
  • How good is your team? This is usually neglected, but VCs put a lot of focus on this.

Prepare to be challenged and defend your ground

It’s
the investment team’s role to make sure they are going into a
high-potential and profitable business and vet the eligible startups. As
an entrepreneur, you will be questioned on every assumption you make
and any decision you plan to make.

The
key is not caving under pressure and defending your business plan. VCs
highly appreciate founders who are convinced of their idea and can
convince others.

Approach the meeting as a partnership opportunity not a financial transaction

VC
funding is neither a grant nor a loan; VCs will invest in an equity
stake in your company and become a shareholder on the same level as you.
This is why you should think of VCs as potential partners; some
investors are silent while others will participate in the growth of the
company.

VCs
can help in many different ways other than with money: they can
brainstorm and provide insight when needed, open doors to other partners
or VCs and sometimes provide hands-on expertise. A good relationship
with your shareholder will always unlock new opportunities and growth.

VC Funding: there is no one-size-fits-all

In
the end, the most important point to remember is that like any company,
a VC is run by individuals and individuals have different visions, risk
assessments and priorities. Investing in a startup has a very
subjective component; if there were a one-size-fits-all approach, then
all VCs would invest in the same startups and bidding wars would ensue.

The
tips discussed above will increase the probability of a positive
outcome, but nothing guarantees funding. Resilience is key and if a door
closes always move on and knock on other doors.

PS: This article has been also published on the Berytech Website http://berytech.org/acing-your-vc-funding-meeting/ ; you can also find other insights regarding Entrepreneurship