Repeatedly on social networks such as Linkedin, I have seen a post making the rounds, where platform users are given the golden ticket to access early-stage VC’s – an excel list of early-stage venture capital companies which look to provide pre-seed or seed capital to companies wishing to climb the VC ladder to success and untold riches.
The catch is, you have to like, comment, share the post, and in most cases, you have to connect with the profile too.
So, I did some research on this, and far from being the golden ticket it is marketed to be by the social media posters, it is just a basic list.
The list, which is authentic, is freely available on the internet and has been composed by Shai Goldman. It provides the following information:
· The Name of the fund
· The Amount raised by the fund
· The Date the raise was announced or raised
· The fund number
· The location of the fund
What the posters who are using this list as a marketing gimmick to further their own profile and expand their coverage, fail to mention is what the Early Stage VC list does not contain.
It does not contain telephone numbers nor email nor points of contact within the funds. Without this data, it means that you still have to do the work and put in the effort; as such, the golden ticket is a dud.
If you wish to have access to Shai Goldman's VC lists and access to his excellent blog, it is linked at the bottom of the article.
I have got news for you guys, there is no shortcut to success, there is no easy money and raising funds is hard. It takes a lot of time and effort and in some cases, a little bit of luck.
Let us look at this in a realistic sense. You believe you have the next best thing since sliced bread. Your idea is hot off the gray matter, and your newly formed company will be the next unicorn, the Stipe, the Uber, the We Work (lol, could not help myself, sorry)
You are not, well 99% of you are not, and you have no chance of being until you have proven yourself to be.
Venture Capitalists and VC companies or funds are inundated with requests for funding from the thousands of companies, which also think they are the next best thing. Some VC’s will get upward of 1000 inquiries a week.
Yeah, that is a lot fog and noise you have to get through, and now you know why VC’s do not reply to each and every inquiry, they would love to, but it would be an absolute waste of resources.
So, what do you have to do to raise funds from a VC? You have to stand out. You have to make an impact on every aspect of what you are doing! Getting a friendly intro, that will help, but it guarantees nothing.
A VC wants to place his money on a team that will deliver, which goes out of its way to excel and do everything it needs to do to succeed and then, some more. They are new thinkers, disruptors, and outliers but most of all, they are professional. Do you meet the description?
So, start at the beginning.
1. Identify your Value Proposition.
2. Commit to market research, VC’s love numbers and data. They will want to know how much market share you have and how much you intend on building that too.
3. Ensure you have a team that is top of the league and delivers.
4. Attract sector leaders as mentors and advisors, if your project has some sass, they will want to be involved, and maybe it will not even cost you an arm and a leg.
5. Build out your pitch deck, your executive summary, and ensure the narrative is correct to ensure your idea stands out.
6. Ensure you have all documents ready such as financial statements, regulatory paperwork, subscription forms, market research, cap tables, details of previous funding etc. etc .
7. Maintain all docs in a shareable data room.
8. Identify the VCs which are actively investing in your sector and stage, and there are a number of tools and venture platforms available such as Angel, Crunch Base among others. You do not want to waste your time and effort sending to funds/ VC’s who are not active in your sector.
9. Ensure you fit with their investment philosophy.
10. Craft an amazing opening letter, identifying your qualities, value, and traction so the associate can see you are serious and emphasize how you would be a fit into their investment thesis.
11. Start your outreach.
Do you send all of your documents at one time? No, just start with your intro letter and executive summary. This way, if they are interested (my fingers are crossed for you) they will request access to your data room for the full review.
A VC has replied, what to do next?
VC’s are very busy, and they do not like to mess about, if you get a request for documentation, get access to your data room back to them as soon as possible. Now, you should know, this part of the process can take some time, in some cases, up to six weeks, so continue with your outreach, the more at the party, the better.
The VC may require further documentation, but the ultimate aim is to get on a call. So, provide a number and request a time.
Time for a call with the VC
Ok, do not panic; if this is your first time speaking with venture capitalists, they are not monsters, they are not out to trip you up, nor are they there to waste their time. VC’s are intelligent, highly skilled people who know what they want. You need to fit into that.
Your documentation and research, which has been done to the highest standard have got you this far, and they would like to know more about you, your team, and how you are going to disrupt the world.
Make sure to have your key personnel on the call, the CFO, the COO and one of your primary advisors if you have one. Have all documents at hand and request a video call, where you can point out anything where the VC is looking to gain more information.
Do not be afraid to answer with I do not know the answer to that. You can get the answer or information to him after the call, the same goes for anything he or she requests that they have not already received.
Keep the call formal and pleasant but be passionate, you have put in the work, tell them what got you excited but ensure you point out any advantage you would have over the competition, and if you have techology, the unfair advantage your tech will provide over the competition.
Do not be afraid to ask about their fund, ticket size, and usual ways of funding and exit strategies. Great question founders never ask VC’s... “why do you want to help me” it is a closing question. Get them to attribute positive feedback on your product.
The VC, if interested, will discuss the terms, and if interested will come back to you with an offer, this we will get into in the next article.
Remember to list your startup here on Trustedin Trading, just click on the startup ecosystem button on the top left hand side of the platform and register, it is free, and we offer you lots of tools to help you on your journey.