Posted by Anonymous on 2008-03-08
I raised $40m from top tier VCs 6 years ago and am now raising money again for another startup. While initially rusty, I quickly remembered how much of a game this is. Recently I spoke with 3 first time CEO who are raising money for the first time. Here are my 2 cents on a few items. I'm interested in others thoughts.
1. DO NOT leave or email your presentation. you are only educating them on your category (not your job) and informing your competitors. As CEO of a VC funded firm, I always was emailed the presentation of any competitor. IF they insist on seeing presentation before mtg, then they are not interested. All the top guys know this and thus take notes during the meeting. IF they are not taking notes during your meeting and still ask for prez, then they are not interested. DO send them some material to spark interest - founding team resume, paragraph overview, perhaps article about customer pain.
2. First 10 minutes are most critical. Yes, its very hard to get meeting, but once you have meeting, you need to QUALIFY and CONNECT with the partner in the first 10 minutes. Qualify by finding out how much they know about category and space. Connect with him or her personally (without .ppt on). Resist natural inclination to firehouse .ppt since you only now have 45 minutes. The ONLY purpose of the first meeting is to establish interest to have a follow on meeting. If they don't see enough promise in your team and market opportunity, then they will not fund deal and you need to move on.
3. Beware the "Head fake" to learn. "Yes, yes, this is VERY exciting. We want to do this deal." You get excited, send them your research and customer contacts, and they now have learned everything you learned on your dime. Deal excitement then dies. Instead, given them 1-2 very specific items of homework (perhaps contacts for you on due diligence, MAYBE 1 customer contact late in the process). Be constantly giving them homework and watch their _actions_ and not words.
4. Do not serialize pitches. Schedule as much presentations during same 2-3 weeks to generate excitement and interested. The #1 thing to get these guys to move or to pass is another firm putting down term sheet down or seriously looking at deal.
5. Don't forget - 90% will never say no. Pitch, given them homework, then move on. If they are interested, they will find you. It's in their financial best interest to keep as many deals open as possible (yes, this is incredibly frustrating for CEOs but it's the way it is).
6. Keep raising money until money is WIRED. Plenty of deals going south (yes even at top tier firms) before money is wired. Smile, but only believe money being wired.PRIVATE: Members Only
Posted by Mr. Smith on 2008-05-13
Tags: Preparation Introductions Email
Almost every introduction to a venture capitalist is done through email, and most introductory emails are poorly crafted. The two most common mistakes are: (1) overwhelming a potential investor with too much irrelevant information or (2) avoiding any valuable company information and focusing on the pleasantries.
Companies would be much better served by including a standardized and brief paragraph that described the business in a way that a potential investor can digest quickly. Read on...PRIVATE: Members Only (1937 Characters)
Posted by Mr. Smith on 2008-03-06
You have been slaving away at a fundraise, and now you have an introduction to a top fund. Pow! You pop open Outlook and copy and paste your three page introduction email meets business plan synopsis. Guess what" Bad idea. Almost every entrepreneur, including myself, has overdone the initial introduction email. Your mission is to sell them on the opportunity, not to close a deal with the Death Star of pitch emails. Let's walk through the anatomy of a good introductory email.
Starting at the top, the email title should be clear, including key data points on stage, industry, and need. For example: "Early Stage Biotech Opportunity" or "Follow-on Investor Needed for Cleantech Expansion Round." If you have a well-known company, then say "TechCrunch Looking for small Series A."
Blanket spam-pitches are insulting, so the email itself should open with some personal context based on doing your homework. For example: "I see you are on the Board of VentureBeat, and I would like you to look at my TechCrunch opportunity" or "Roger has said that you are the right person for us to speak with about cleantech."
Next is where every entrepreneur makes a series of classic mistakes. A compilation of overwhelming market data, jargon, and bullet points normally follows the impersonal introduction, accompanied by a slew of useless attachments, login information, etc. Do you think that VCs actually read all of this stuff" Your goal here is to say as little as possible and get this person on the phone.
Your best case scenario is to boil down personal background, market need, market size, and funding requirements into an easy to read paragraph (even a sentence, if possible). For example, "After selling my last company Google, I patented a process to generate electricity from highways. An initial field study demonstrated that the 405 through LA can supply electricity to 400,000 homes, generating $40 MM in revenues. We are looking to raise a $5 MM Series A to deploy a larger technology trial to supply electricity for 10,000 homes before we enter full-scale production across the United States."
Close your email with a couple of opportunities to speak, and be specific. For example, "We are planning to start meeting with investors next week, and I have availabilities on Tuesday and Thursday afternoon. I will also be down by your offices on Friday. You can reach me on my cell to set something up." Never delegate scheduling to your assistant, especially when fundraising.
Do any other Members have some good tips for an introductory email to post below"PRIVATE: Members Only
Posted by Anonymous on 2007-04-13
Tags: Pitching Investor Interest Email
When raising my Series A, I sent out a monthly "progress update" newsletter to all the partners and associates at various funds that I had been in contact with. We highlighted new deals, revenue tractions, industry articles, and general growth. This helped to build a decent amount of buzz in the investment community about what we were doing, Members, read on...PRIVATE: Members Only (1336 Characters)