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1. Do your homework: research into which VCs invest at your stage and sector, research into the actual partners.
This is pretty easy to do, just about every VC firm�s website will tell you about what sectors they invest in. You can look at their portfolios to see exactly which companies they have invested in, and see if there is a conflict with yours. This may seem basic but putting together a pitch takes time and so does evaluating one, so make sure it�s relevant to all parties.
VCs tend to be very public online - without exception they will be on Twitter and AngelList, most will have a personal blog too. So look them up, see what they are interested in and if you�ve got something to say, engage with them in a conversation they are having online.
2. Get a warm intro, you�ll be more likely to get a response:
This is repeated time and again but it goes without saying that one sure way a VC is going to look at your deck and give you feedback is by getting a mutual acquaintance to intro you. VCs love �qualified dealflow� because it eliminates a lot of the hard work that goes into filtering out the noise from the deluge of dealflow that hits their inbox.
So trawl LinkedIn and AngelList to see if you�re in some way connected and then leverage that connection. Portfolio CEOs and execs are a great place to start because VC�s trust their judgement (otherwise they would not have backed them in the first place). Other investors (angels or VCs) also make for good intros.
3. In absence of a warm lead, be highly targeted in your �cold calling� and think about alternative channels to email. You�ll often hear VCs pontificate about the importance of their inbox while simultaneously moaning about the unsolicited emails they get. We�re not going to do that but we will say that other, more immediate communications channels could help you cut through the noise and stand out from the crowd. Commenting on a blog or engaging on Twitter could help here.
4. Send the right amount of info, but what / how much to send?
In short, enough to get them excited, but don�t show your whole hand before the VC has shown a serious level of interest.
It is important to communicate what the big vision is and make sure the VC gets a sense for how big it can get (hopefully if you have done your homework and targeted the right investors, they will understand it straight away). However what really excites VCs is real traction and momentum, rather than 3-5 years forecasts.
Team information is key too - if you have previous experience in a sector tell them, if you are working with an ex-Googler, ex-Rocket etc tell them.
It is incredibly rare that a VC will sign a NDA, so be careful about confidential info if you are concerned about it: don�t share user-specific data without permission and more generally don�t share anything you wouldn�t want to be out in the public domain until we have confidence that the VC is seriously engaged.
5. Do some practice runs before hitting the main stage: pick some friendly VCs
Before going to see the VCs you have identified as your ideal partners, make sure you have tested your pitch with a few VCs that are on your tier 2-3 list (see our first point to form these lists.)
Take their feedback on board and refine your pitch along the way, write down the questions they ask and make sure next time you are armed with great answers.
6. Build relationships with VCs over time, but build momentum once you go for it.
VCs rarely invest after meeting you for the first time. They want to get to know you over a prolonged period of time, tracking how you progress against set milestones.
There is a saying that goes: �Ask for advice, get money. Ask for money, get advice.� So even if you�re not raising, start engaging with VCs informally, at least 6-12 months before you actually need to raise. If they do office hours, go along and say �I�m not raising money right now but this is my situation, what do you think, where do I need to be in 6 months to have your interest?�
That way when you do get in touch about money you�ll have previous touchpoints from where you and the VC can draw reference. On a graph that�s lines over time, not instantaneous dots.
Once you turn the fundraising process on though, make sure you keep the momentum up throughout it. VCs easily get cold feet when a deal loses momentum and at times you may have to artificially create it in order to keep the deal alive.
7. Make sure the house is in order
The average fundraising process can last for six months from first contact to completion. A way to avoid unnecessarily elongating it is to ensure that the company is ready to go through it.
That means ensuring key contracts are properly signed, employees are on standard company employment contracts and have assigned IP rights (particularly former employees who have moved on), option agreements are formalised, management accounts are in a good shape etc. These are relatively easy things to fix, often formalities that can be dealt with with little or no expertise, but they will either save you time and headaches down the line, or bite you back.
8. Advertise your strengths, but also know where you are going to need help and don�t be afraid to ask for it.
Entrepreneurs fall into one of two camps: those that �know what they don�t know� and those who �don�t know what they don�t know�. Guess which ones VCs prefer to back?
Being self-aware for a founder is a very important quality to have, particularly around weaknesses and areas where they will need help. It is fine to admit your are not excellent at everything and that there are gaps in the team!
For example, if you�re a great sales lead organisation but need help in the technological department then you have to identify that when speaking VCs. This is going to tell them why you need their money, show them that they can help with their prior experience and network and demonstrate that you have a good strategic view of your business.
9. Think of all the difficult questions you are likely to get and prepare good answers in advance
VCs all tend to deploy a similar framework against investment opportunities they review: market size, addressable market size, competition, regulatory threats, incumbents, monetisation, sales cycles, traction� the list goes on and on.
These are all things that VCs consider when looking at an investment because they are fundamental to a business - you have to have an answer to each of the concerns they�ll raise around any of these points.