Whine (sadly, not wine)
This is the second part to yesterdays blog post on capital raising, following a Q&A post a lecture I gave earlier this week. I will do a more fulsome post on cap raising at some stage, but a couple things seemed to resonate in particular with the audience 1) questions you should ask VC’s when you are capital raising (yesterday’s post) ; and 2) addressing a few capital raising whines I often hear. I thought they might be worth sharing. Today, a few musings about number 2 (and a bit of whining of my own to go along with it).
- “The VC just didn’t get it/us/our product!”
We hear this a lot. And its actually probably right. The investor you pitched to probably didn’t get it. So technically its not really a untrue.
But, these people you are pitching to are usually pretty smart cookies, so if they didn’t get it, its not because they are a few IQ points short of truly understanding your amazing product/platform/service, its that you likely didn’t do a good enough job of explaining it/selling it. Our team sees over 1000 opportunities a year, we have three people in our team, we logistically cannot devote an hour meeting to each new opportunity we see to mine the diamond from the rough. You need to be able to articulate the problem you solve and why you will win in less than 5 minutes (preferably 2) and if you think that’s unfair or VC’s are being pompous, lazy dicks about their time, think about how long you have to convince a customer of what your product/platform or service can do for them…..
2. “Being pushy just shows them you are committed and ambitious!”
Its pretty common for people to completely ignore requests to go through a proper process we outline to companies, to evaluate new opportunities. They will try to go around it, or above it. The reason we have a process is not because we are trying to be dicks about it, its because if we don’t, we run the risk of losing track of new opportunities (which has happened) and then its a terrible outcome for the founder as we look like and feel like even bigger dicks. So, if we ask you to submit something through our portal before we take a meeting its so you don’t fall through the cracks. If you ignore that request, we think you are either selfish or stupid.
People will also often staunchly resist meeting with anyone but me. Even if I tell them that the process is to first meet with a colleague, even when I tell them my colleague has a more appropriate background, more bandwidth etc. This is just dumb. And arrogant. Mostly dumb. Don’t be elitist about this. You are not a special snowflake who gets to be treated differently.
We also try to, where possible and appropriate, go to great lengths to give founders/management detailed feedback about why an opportunity might not be a fit for our fund or what they might want to consider to make it investible by us downstream. What is not cool is a 10 page email response, that you’ve seethed about for 1–5 days, on why you disagree. Which then turns into a 30 email correspondence trying to change our mind or worse, abusing us.. in email or over the phone. If I had a dollar for very time I’ve heard “We will change your mind if only you give us another meeting” Or “You are going to rue the day when you realise what you have said ‘No’ to!” I would have my next fund raised. Just a heads up….changing our mind via either of these mechanisms…. never happens. Ever. *
I often have people, who I’ve never met, calling my (unsuspecting) colleagues and bullying them into putting a meeting in my calendar — sorry, but this is also not cool. The one who has control over my calendar is me, not you.
Pushy signals ‘entitled’ , ‘unable to read basic human signals’ and ‘complete lack of self awareness’. It also signals ‘selfish’, which is one of the fundamental traits we select against. Do you know what is a signalling trait for ambitious and committed? Persistence. And there is a world of difference between persistent and pushy.
*VCs if this has happened, let me know, I’d be keen to hear examples of this.
3. “Its impossible to know what VC’s are looking for!”
Let me introduce you to Google.
Most VC’s have their investment focus and strategy on their websites which is as clear as it gets. Most VC’s have their portfolio companies on their websites which makes it pretty easy to backsolve what types of companies, what type of sector and what stage they like. Many VC’s do a considerable amount of PR where they talk openly about what they are looking for which is designed to help deal origination. Even if they don’t do any of these things, its not difficult to speak to a few well selected people in the sector to get a sense of what the different funds look for and who might be most appropriate to target. If you are not embedded enough in the sector to know who these people are who can give you that advice, or you are unable to use google, I’d argue you might not be ‘investor ready’.
It is astonishing to me how many founders approach us, without doing a single google search to try and understand what we like to invest in. And we are a listed company, so we have more information than the average fund manager available for public consumption. If you are not doing your research in advance, then this means you are spending precious minutes in your first meeting trying to understand the basics and it means you wont have tailored your pitch for the investor you are speaking to. This makes you look unprofessional and is a signal for how prepared you plan to be with your business and ultimately this undermines your ability to be successful.
Also Protip: Be really, really careful with mail merge or cut and paste emails. Can you guess the number of times I have received an email that starts with “Dear Niki” or “Dear Daniel” and the number of times we have invested in those companies ……