Your wetsuit for the waters of the shark tank
I had just rented my Cheap-O rental car at the San Francisco airport and I was headed south. I was running through the slides in my head, and practicing my intro in the rear-view mirror. “Hello, Sam. It’s great to see you again….” I checked my hair and makeup, made sure I had my business cards and that my laptop was charged, and I was off….to my first meeting with a Palo Alto venture capitalist.
I’ve seen so many movies and television shows about Silicon Valley, but it is a completely different experience to have your first VC meeting first-hand. It’s hard to hob-nob with the big boys, especially when you are a tiny little person with a brilliant idea and no money.
Jumping back to the present, I have now pitched more than 200 angel investors and VCs, and I’ve heard a few yeses and a lot of nos. After raising $2.2 million myself and helping others raise nearly $100 million in venture backing, there are some very real and helpful tricks to this process that can help you avoid peeing on your shoes.
There are countless articles out there about what to include in your slide deck, so I’m not concerned with that. I assume you are already well-practiced and have a good idea. But how do you keep from looking like a total amatueur while sitting in the same room with the person who can write a check and change your life?
Find them where they are
So how do you get into their office in the first place? Be where they are. Attend conferences where they are speaking. Apply to pitch at competitions where they are judges. Bump into them at a sporting event where their kids go to school. I call it “subtle stalking.” I worked to get myself in front of as many of my targets as possible as often as possible. And then I’d work my booty off to wow them enough to get a business card and an invitation to a meeting. This will work light years better than a cold email, and I strongly recommend it.
Do your homework
The first meeting is often with just one partner of the firm or might be with a principal, associate or analyst. You need to get this person interested in your business and to become your “champion” before meeting more people in the firm.
Once you secure your meeting, read up on the person, the fund, the portfolio. Find out as much as you can about each. Find connections between what you do and what they care about. And prepare your deck and presentation to play up those connections.
Show up on time. No. Show up early and sit in the parking lot.
I’ll never forget it. I was running late from one investor meeting to another, and got stuck in traffic. I called my assistant to let them know I was running late, and she missed my call. So I showed up late to a meeting with Scale Ventures…and they politely asked me to leave as soon as I walked in.
Schedule plenty of time to arrive at the VC office early, and sit in the parking lot if you need to. But whatever you do, do not show up late. Do as I say, not as I do.
Find a personal connection
Spend your first 5-10 minutes connecting with the partner or associate. Ask about their family and hobbies. Find something that connects the two of you on a personal level. This will help you in spades down the road, and will make you more memorable to the investor.
VCs as a group are very intellectually curious, so will likely want to dig into your business. I think that’s good, but do make sure to spend some time trying to get to know the person, and giving them the opportunity to get to know you. Character, integrity, personal style, and “fit” between people are the most important criteria in my opinion for selecting an investor, so use the opportunity to inform a future decision.
Be funny, well-rounded, and interesting. Be someone they will like.
I am always surprised when people jump into their topic and start telling the investor about their patent pending technology that is going to revolutionize the way that internet advertising as we know it. They’ve developed optimization technology for banner advertisements that is going to increase conversion by 60% or more. As they’re talking and already on slide 7, the VC is still trying to decide whether or not they believe the founder. It sounds very impressive but consider the following scenarios:
- You graduated with comp sci degree from Cal-Tech before working at Overture on sponsored search algorithms before being acquired by Yahoo! and working in the banner advertising division for 4 years; or
- You worked at a consulting firm that advised customers on web strategies. You got the idea when you worked with clients and noticed how poor most customers were at improving their banner CPMs.
If you share that you are the first scenario first, the VC is already at the edge of their seat before you tell them your cool idea. But very few people fall into that bucket so what if you ARE case 2?
Make sure that you put your best foot forward on what your background is and why it is relevant to the company you’re building. If your top team members complement your skills, make sure to tell that as well. Maybe you’re not a tech-head but you’ve hired a 23 year old from Harvard with a 1600 SAT who’s your CTO.
And remember that your personal bio is not the opportunity to tell the investor about what you were doing in high school. All of the rules of the Elevator Pitch apply to personal bios: be brief, show enthusiasm, avoid jargon, use numbers, and be prepared for a deep-dive if asked.
Finally, just a thought. Have something to talk about that is not your business. Too often I see a founder on a mission. The VC knows that you care about your company but you need to show them you care about more than that. Show them that you are human. And that you have more to you than an algorithm. VCs invest in people. Be a person.
Be on fire about your concept
If you aren’t drinking the Kool-Aid, no one else will. So even if you are a naturally analytic-type, practice getting yourself pumped up. You’ve got one chance to wow these people. Make sure that you use this time wisely and grab their attention and interest.
Ask good questions
You are prepared for the questions that they will likely ask you about your business model and competitive landscape. You know your deck inside and out. You’ve gone through your financial projections with a fine-toothed comb. But what do you say when they ask, “Do you have any questions for us?” Use that homework that you did before the meeting to ask about potential benefits your company could have with their other portfolio companies. Ask about the industry. Ask about how valuations are being determined. Hell, ask about the dog that you saw in their Facebook profile. Just be sure you are ready to ask questions.
Plug at least one of their other portfolio companies
Find a company in the VC’s current portfolio that you admire. Spend time looking into that company and its founders. Know their recent announcements. Find a recent exit that the partner is proud of. And congratulate them for it.
Ask for money, contacts, mentorship
If you don’t ask for anything, you won’t receive anything. Be very specific about what you are asking the VC for. And it shouldn’t just be money. You should ask for three introductions to other VCs that might be a good fit for your company. You should ask for a candidate suggestion for your open CTO position. You should ask for an intro to an industry conference for an opportunity to speak. Get creative, but give the VC as many opportunities as possible to say yes to you.
It’s a great idea in my opinion to give the VC some concrete milestones that you expect to hit before you seek funding. If you do hit them, it adds to your credibility further down the pike.
Also, make sure you solicit feedback from them, see if they have any thoughts that help you guide your business. In addition, make sure you find out what’s currently in their portfolio and what their current interests are: you are then in a position to be helpful to them (if you so choose) or other friends of yours who are seeking funding (by making well-targeted referrals). Good VCs will, if they believe your business has merit, generally offer various forms of assistance at this stage, mostly in the form of intros to people or businesses where there may be mutual benefit. This is not purely altruistic — they can get an opinion of your business from a subject-matter expert — but can add nice value regardless. If they make no such offer, that tells you something.
Push for a hard yes or no
VCs are famous for avoiding saying “no.” They won’t tell you “no” because they don’t want to be the VC that let the unicorn go. They want to leave their options open. They want to keep you on the hook, just in case they might be interested in the future. Pitching VCs is a lot like dating. At the close of your pitch, ask, “How likely are you to invest in this round, on a scale of 1-10?” Anything below a 7 is a no. This allows you to move on with your other asks.
Whatever you do in your first meeting, you’ve taken the right first step by reading up on tips and tricks learned from the field. Learn from my mistakes so you have room to go make, and learn from, your own.
My bottom line: prepare, be frank, be honest, and be genuinely curious….you will do just fine.