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Posted at 6:44 pm

2008 Jul 28

Funding 101 – Top Ten Tips for Navigating Venture Capital 1

Recently I had the opportunity to be part of a panel at DreamIt on Venture Capital.  The audience was mostly made up of fresh entrepreneurs who hadn’t raised money before, so I came up with a Letterman-style list of Top Ten Tips based on my experience of talking to hundreds of companies each year.    Here they are:

10 – Introduce yourself properly – not only when you’re in a meeting (names and roles of each attendee before you start), but be sure to use your company name in the subject of introductory emails.   It’s always best to be introduced by someone who knows you and knows the firm.  

9 – Show you know something about the firm– Ask a question about how something relates to another one of their portfolio companies, or show that you know something about the firm or person – a little preparation will help you stand out.    If you’re sending a blind email, you should explain why you think it might be a fit for this particular firm before you start in with the pitch.  

8 – What problem are you solving?   I think this is one of the most important issues to cover early in any discussion, yet far too often companies don’t clearly articulate the problem they are solving in the market.

7 – “I Don’t Know” is a great answer to a question if you don’t know – Josh’s post couldn’t say it any better.

6 – Ask about their process – let them tell you what the appropriate next steps are and timing, and let that drive your follow up.

5 – Follow up on introductions – If an introduction is offered, you should treat it seriously and make sure you connect with the other person.  This is often how VC’s get feedback from other people they trust, and not following up sends a bad signal.  

4 – No Big Files – If the executive summary or initial meeting PowerPoint presentation is too big (I’d say 3 MB is a reasonable limit), try sending as a PDF instead.  If you must send a large file, better to use a service like this.  

3 – If it’s not a fit, ask for advice.    It’s fair to ask what the VC would do if they were in your shoes: ask them for their suggestions on other approaches you might take with the business or with the fundraising.

2 – If they say no, be gracious.   The term in venture capital is that they will “pass” on the company – if you hear that it’s best to be courteous, ask for any advice/feedback, and move on to the other VC’s you’re talking with.   Sometimes a company hears no from one partner, and attempts to restart discussions with another partner in the same firm. That’s up to you – I’ve seen it tried a number of times, but never successfully.  

1 – Make it easy to reach you – include your name, company, email, and phone number – Put it on the first and last page of your presentation, put it in your executive summary, and put it in your email signature.  

Here are some other links and resources that might be useful – feedback and other resource suggestions are welcome in the comments:

TechCrunch – a great outline of ten slides they used at the UK TechCrunch Pitch!

Guy Kawasaki – Art of the Start – still the single best book on starting a company in my opinion.

Ask the VC – great resource of questions and answers around Venture Capital.

Steve Barsh – how to Derisk your business.

Get Venture by Mark Peter Davis – An extensive guide for entrepreneurs on raising venture capital.

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