Getting the Attention of a VC
CMM March 5th, 2008
I’ve had a nice long break from writing anything, mostly the results of: 1. Twitter working as my release, 2. traveling, 3. 60+ hour work weeks, and 4. fighting off a cold that doesn’t want to die.
Since I know a few young business folks in the East TN area occasionally drop by for a read, I thought I would share a blog post from “The Post-Money Value” on getting the attention of venture capital. I think the post hits the nail on the head and local readers should try to apply those guidelines to their investor of choice.
Here is a synopsis of the guidelines presented in the post:
- Get to know the profile. Every VC fund has a certain profile of criteria (investment size, location, stage of development, technical focus, etc). Finding investors interested in your area is half the battle. Don’t forget, venture equity should be very high value-add to the company. The better you fit the profile of the VC, the more likely they will be able to add value through their experience, network, etc.
- Solve a problem. Yes, it really is that simple… although I’ll add that the problem must have a large enough market and the solution must have a certain degree of profitability. VCs are obligated to their partners and investors to provide a very high ROI. That means that they sometimes have to pass on profitable and rewarding “solutions” because the numbers just don’t work. And for all of you technologists/scientist/engineers out there, read this one over and over and over…
- Play to the VC’s strengths. As a piggy-back to point one, look at the current profile and the VC’s historical investment decisions. Draw some conclusions– What area is the VC interested in? Do you see any technolog trends? Any prefered profile of entrepreneur? Also, this requires getting to know the person. Don’t feel obligated to rush right into the sell. The owner-to-VC relationship is a critical part of the investment decision that takes time to develop/mature. Don’t try to force it.
- Understand the odds. We’ve all heard the numbers. 100s of deals a year and around 2% actually get financed.
- Ask for the No. A good VC should understand that your time is valuable (as is theirs). If you feel like things are stalling out and not progressing, don’t be afraid to ask for the no. If it isn’t going to be, its better to know sooner than later. Then you can move on, and there are lots of financing options and opportunities. Remember, if you can’t hear the word “no,” you aren’t fundraising. You’re begging and desperate… and both are major turn-offs.
