Business model, pitch deck, networking… You have been working for the past few months on having the most exhaustive documentation and best story and finally have meetings with Venture Capitals (VCs). The stakes are at their highest and you don’t want to squander the opportunity; what do you need to ace the meeting and get VC funding?
The following article will give you an overview of what you need to catch a VC’s attention and maximize the face time you have with the investment team.
Know your audience
VCs come in different sizes and forms; each one has a unique investment mandate and different requirements; approaching each VC meeting the same way is a recipe for disaster.
Know what the VC you’re meeting looks for; check their website and any documentation on them in order to know their focus areas, see their portfolio companies and investment preferences.
Another important component of VCs is their people, identify the team’s background and decision makers. Some VCs have a collegial approach where an investment must pass with the majority of the team no matter the seniority, while others have one decision maker – the fund manager or a partner.
Be courteous and humble
The ratio of startups to VC is very high, meaning you have to tick the right boxes to get funding while considering that a VC might screen a dozen startups before making an investment. The competition is intense, and the outcome is not guaranteed.
First impression is key, and nothing turns off an investor more than arrogant founders who say they have many investors already lined up. Regardless of the legitimacy of a startup, VCs put a lot of focus on the team and the founders’ character. The transaction leads to an ultimate partnership and both VCs and startups should be able to communicate efficiently during the company’s lifecycle.
Have a good pitch and structured approach
Let’s be clear on one universal truth in the entrepreneurship ecosystem; there is no one-size-fits-all approach. Every VC will have criteria they favor, however having an organized pitch and structure increases the chance of having favorable returns.
It does not matter if you have the best-looking presentation or the longest pitch; a good structure conveys a better message.
The best and most important ideas to circulate are the following:
- What problem are you solving? Why is it relevant?
- What is the solution you are providing and does it work?
- Is there a market for your idea? Where is it and what’s it potential?
- Is your idea unique?
- If yes, can you implement it and sell it?
- If not, what gives you an edge over other copycats?
- How do you generate revenue and grow? You have to have a concrete plan on selling your product/service
- How good is your team? This is usually neglected, but VCs put a lot of focus on this.
Prepare to be challenged and defend your ground
It’s the investment team’s role to make sure they are going into a high-potential and profitable business and vet the eligible startups. As an entrepreneur, you will be questioned on every assumption you make and any decision you plan to make.
The key is not caving under pressure and defending your business plan. VCs highly appreciate founders who are convinced of their idea and can convince others.
Approach the meeting as a partnership opportunity not a financial transaction
VC funding is neither a grant nor a loan; VCs will invest in an equity stake in your company and become a shareholder on the same level as you. This is why you should think of VCs as potential partners; some investors are silent while others will participate in the growth of the company.
VCs can help in many different ways other than with money: they can brainstorm and provide insight when needed, open doors to other partners or VCs and sometimes provide hands-on expertise. A good relationship with your shareholder will always unlock new opportunities and growth.
VC Funding: there is no one-size-fits-all
In the end, the most important point to remember is that like any company, a VC is run by individuals and individuals have different visions, risk assessments and priorities. Investing in a startup has a very subjective component; if there were a one-size-fits-all approach, then all VCs would invest in the same startups and bidding wars would ensue.
The tips discussed above will increase the probability of a positive outcome, but nothing guarantees funding. Resilience is key and if a door closes always move on and knock on other doors.
/ About the writer /
Souhail Khoury is an Investment Associate at Berytech Fund II. Souhail has more than 7 years of experience in technology and entrepreneurship. Prior to joining Berytech Fund Management, Souhail worked at Samsung’s MENA Headquarters and launched an Accelerator for Intigral, Saudi Telecom’s Digital Media Arm. He has been a judge in many startup competitions in the MENA Region. Souhail holds an MBA from Insead, a Master’s degree in Digital Business and Strategy from HEC Paris and a Computer Engineering Degree from the American University of Beirut.