Since then, I've been focused on raising money for my new startup company. That has meant a lot of travel time. I've been flying back and forth between the east and west coasts, pitching my startup to VCs.
It's remarkably hard to get VCs to take a meeting with you, especially if you're hoping to meet with top-tier investors. Which is kind of ironic, since their whole job is to meet with entrepreneurs.
So how to you connect with VCs in the first place? Here are the best and worst ways to do it.
The Best Way to Connect With VCs
Who are the best possible people to introduce you to a VC? CEOs who have already made money for that investor. You're pretty much guaranteed to get a response.
CEOs are like super-connectors. They know everyone and everyone knows them. They've taken their company to market and, along the way, met with a lot of investors.
But here's the thing. A successful CEO might not want to introduce you to their network. After all, probably everyone they know is asking for these introductions. So CEOs are going to be picky.
That's why it's important to befriend these people before they're successful. Go to CEO networking events whenever you have the opportunity. Start building lasting relationships now that will help you later on, especially when you want to get meetings with VCs in the future.
Finding a successful startup CEOs is like finding a unicorn - they're rare and remarkable. Only about 1 to 3 percent of CEOs produce spectacular outcomes (i.e., they actually make money for their investors).
Most of the time startups either go sideways or bankrupt. Failure is common.
There's nothing worse than being introduced to a VC by a CEO who raised $100 million but has a company that's worth $10,000. You're pretty much guaranteed to get no response. So avoid donkey CEOs!
Guys, this works incredibly well. In fact, two really experienced CEOs I know are responsible for 80 percent of the meetings I've been able to set up with VCs in the past month.
The Worst Way to Connect With VCs
Who are the worst possible people to help you get a meeting with a VC? Anyone who has the title of Entrepreneur in Residence (EIR).
Your interests aren't aligned. You're trying to get funding, but EIRs aren't investing partners. These people usually don't have the authority to make deals.
Basically, an EIR is someone who is temporarily between jobs. What motivates them is the chance to hang their hat on investor's name as a perch to find their next gig. Basically, an EIR will try to take over your idea and run your company as CEO.
Bottom line: EIRs aren't motivated to get deals for their firm. So don't waste your time with an entrepreneur in residence!
Another Best or Worst Way to Connect With VCs
Investor referrals can be either the best way or the worst way to connect with a VC.
An investor can be the best way to connect with others VCs - especially if they are really gung-ho to participate your next round of funding but they simply can't underwrite the whole endeavor. In other words, they are willing to invest $1 million or $2 million of the $10 million (or whatever amount) you're seeking.
This is the strongest endorsement you can receive. Not only are they telling a large investor they've worked with in the past that your company is interesting, but they're also willing to invest millions of dollars into it. They're saying, "I want to do this deal with you."
But an investor can also be the worst way to connect with other VCs - especially when they chose not to invest in you.
Can you imagine the awkward email introduction? "Hi, I'd like to introduce you to Larry, who has an interesting startup."
That investor would probably be thinking, What the heck? If it's so interesting, why aren't you investing in it?
So never get intro from an investor who isn't investing in your company. Find out the name of the best person to contact at that firm. Then find your own way to get an introduction through some other channel.
Connect with VCs through:
- Successful CEOs
- Interested follower investors
Don't try to connect with VCs through:
- Unsuccessful CEOs
- Investors who aren't part of your next funding round
And oh yeah, once you get that meeting, make sure you avoid making these mistakes in your pitch.