Any attempt to snowball VCs would fail because they are aware of the situation. However, if you tell them what they need to hear, you’re likely to be welcomed in.
It’s a fantastic issue to have. Your company is expanding, but you desperately need additional capital to keep the momentum going. It’s easy to lose sight of all the potential meetings you expect to have with a venture capitalist in the race to get a green light.
Allowing your internal sense of urgency to colour the way you treat your VCs is one of the best ways to make your achievements repeatable. On both sides, you want the pitch experience to be fun and profitable. Whatever the investor’s answer, execute your current pitch meeting in such a way that you’ll be warmly welcomed back. To that end, here are some guidelines to follow.
- Present a quick, easy-to-follow timeline.
Bring an investment-to-completion schedule with you to your first meeting, as well as a list of main project milestones. Kim Kaplan, the founder of Snack, a video-centric dating app, suggests, “Arrange meetings with a start and end date in mind.” “Provide a practical timetable that makes room for new investors to enter the process while also ensuring that the fundraise does not pause while waiting for decisions,” says Kaplan. Plenty of Fish, her former company, was sold to Match.com for $575 million.
2. Demonstrate your willingness to invest clearly.
Make the mistake of thinking that just because your VC agreed to meet with you, the value of your investment is already known. Walk into the meeting prepared to walk participants through every aspect of your company, regardless of how many preliminary conversations you’ve had. After all, the VC could decide to invite someone at the last minute. Make a list of all pertinent numbers and documents ahead of time, and carry extra copies.
3. Provide a thorough overview of the rivals.
It’s a safe bet that your VCs are doing their own research into similar companies, so you’ll need to know what sets you apart from the competition. “Even if you’re the first to market,” angel investor Sarah Downey warns, “competition will erode your status and your ability to demand a high price whenever they want.”
As a result, demonstrate to your clients that you are aware of the competitive environment. When you proactively provide investors with a good image of your rivals, you send a number of constructive messages: 1. You aren’t pretending that other investment opportunities don’t exist; 2. You are assured that your company can have a higher return on investment; and 3. You have measured the risks and made the required changes to mitigate them.
4. Don’t forget to include both the best and worst-case situations.
As you work your way through every investor culture, being a realist can give you a lot of friends. You allow your VCs to determine the risks and rewards for themselves by providing a full range of potential post-investment outcomes.
Chart out your “sweet spot” along the continuum using all of the data and market research you have available. This should be described as a zone where you expect to land, with everyone coming out on top.
5. Create a list of all potential scenarios.
Can extreme weather events have an effect on your investment opportunity? Is the venture strongly (or entirely) reliant on one or two individuals’ continued good health? Is there a plan in place to deal with various variables?
If the pandemic has taught us something, it’s that we need to be prepared for something. Your responsibility is to make sure you’ve considered the flaws of your situation and devised strategies to address them.
6. Don’t waste your time.
If being a realist earns you brownie points, wasting investors’ time earns you none. Consider this the cardinal rule for all of your experiences, not just with VCs. In-person, via email, or via text, avoid the dreaded “one more thing.” Send a single message that is straightforward, succinct, and comprehensive.
7. Don’t be a victim of compartmentalized thought.
You don’t want to forget anything obvious, and you don’t want anyone at the pitch meeting to point it out to you. One effective way to prevent this is to practice your pitch with someone who is completely unfamiliar with your industry. Instead of ignoring concerns that arise, be prepared to listen carefully.
8. Don’t use some kind of coercion.
If you aren’t sure enough about what you have to sell, you may be tempted to use pressure tactics to persuade an investor to move forward. If your investment opportunity can’t speak for itself, go back to your presentation and fix the weak points. People can spot bluster, and a smart VC didn’t become wealthy by succumbing to it.
9. If you’re asked how much money you’ll need, don’t say no.
If the “How much?” question isn’t answered, When a question like this arises, be ready with a clear answer. There’s a big difference between saying, “I’ve included approximate figures on page 27” and saying, “$15 million.” Even though the amount is explicitly stated in your plan, don’t try and hide it when questioned. It’s likely that the person asking already knows the answer and is just trying to figure out who you are.
10. Don’t make promises you can’t keep.
This is where you should be thinking about the forthcoming pitch meetings. If you make a habit of overpromising, word will spread quickly. It’s always best to temper your excitement with an attitude that shows care, patience, and courtesy when dealing with potential investors.
Don’t get so focused on the money that you lose sight of the fact that you’re dealing with people. Here’s where the old adage about putting yourself in someone else’s shoes comes in handy. What would entice you to part with your hard-earned cash? Find out what they are and state them clearly. You’re far more likely to be welcomed back if you let the truth speak for themselves.