When looking for funding for your business, it’s hard enough to get the attention of a venture capitalist. Once you have a few moments of their time, how can you make the most of it?
Beyond the standard practices in professionalism (be on time, dress appropriately, etc.), business leaders looking for funding should take a few extra steps to get the most benefit from your time with a VC – even if they don’t open their wallet for you.
Know your audience. In this age of Internet-searchability, there’s no excuse not to know about the person on the other side of the table. Set aside a few minutes before your meeting to learn a bit about them. Where did they get their start? What types of businesses have they been involved with in the past? What other companies are they currently funding? Then think about possible connections – if they typically back mobile hardware companies, will they be interested in your iPhone app? How could your business help their existing portfolio companies succeed? Knowing a few key pieces of information can help you understand how the VC may perceive your pitch, and you can adjust it accordingly.
Ask for advice. VCs see hundreds of fledgling companies, and many have launched their own wildly successful businesses. Once you’ve made your pitch and collected their initial responses, ask thoughtful questions about their previous experiences. Be mindful to ask about the challenges for companies like yours, technology that may be similar to yours, and the areas of market potential they are watching. Be open to the advice they give, and thank them for their insights. Think you might have more questions later? Ask if you can follow up in a few days by email.
Get direction. Maybe this VC wasn’t a great fit for your business – and they’re going to pass on writing you a check. Take the opportunity to ask them if they know of anyone who might be interested in your type of company, or anyone who is looking for players in your space. Use caution here – you are not asking for an introduction or a referral! It’s a fine distinction, but you need to be clear that you aren’t asking the VC to put their name on the line for you. You are asking them for direction.
If they are kind enough to point you the right way, don’t mention it. Literally. When you reach out to the new names on your list, ask if they might be interested in your company without disclosing the VC’s name. It’s a courtesy to not parade your connections around – especially if they have been kind enough to set you on the correct path.
Take ‘No’ for an answer. If you went in the room, made the best pitch you possibly could and they declined, then it’s time to ask your clarifying questions and walk away. While this round didn’t go the way you wanted, you can actually hurt your chances at future funding efforts by behaving badly at this point. Ask a few questions to clarify what wasn’t working for them, areas you can improve your pitch and anyone they know who may be interested in your space. Stay professional in thanking them for their time and ask if you can share your progress with them in a year or so. Then walk away, knowing that you presented the best face you could for your business.
Learn from the experience. You just spent time with someone who knows your industry. You showed them what your company can do, you asked solid questions, and you got direction as to what to consider next. Take a few minutes post-meeting to jot down a few notes while things are fresh in your mind. Even a comment that seems mundane could be the key to nailing your next meeting. Write it all down, then set aside a few minutes to review your notes after some time has passed. Think critically about the feedback you received and consider what you can do to make the next one better.