VC is just another client to close
Since I joined Kerala, I’ve been lucky enough to meet dozens of impressive entrepreneurs. The one thing that surprised me the most is that even the most talented client acquisition entrepreneurs were sometimes clueless when it comes to approaching VCs.
It reminded me of a great article by Tim Denning that deals with the skills that are required to be a brilliant Salesperson and I realized that 95% of the skills required to raise funds… were very similar to those required to close a deal.
Reach out or be reached out
There are two ways to acquire customers: Marketing and Sales. And the best teams often use both.
To seem attractive to VCs, it’s pretty much the same.
➔ Marketing skills (crystal clear website, genuine web presence…) will get investors to hear about you. Sales skills (clear value proposition, networking capabilities…) will get you to close your round. Hopefully.
“Is their website / App well designed?”
I hear this about 5 times per Team Meeting (the weekly kick-off meeting in which we review all the pending deals): it’s most likely Antoine’s favorite subject.
More than just a great way to assess the founding team’s marketing skills, it gives us those all-important first insights into understanding just how UX & Product driven the entrepreneurs truly are.
➔ The quality of your website helps us assess overall team quality… which accounts for c. 80% of the VC’s final decision.
Marketing Lesson 101 — Web presence
Have you ever experienced that weird feeling when a friend or family member tells you about his non-profit organization or jazz band? So, you Google it to check it out? And all you can find is unrelated contents? And then you’re like :
It’s pretty much the same with investors.
But if a VC finds you easily (on ProductHunt, with a LinkedIn post, a well-delivered press article, a podcast…) he will also come to the conclusion that clients can find you easily too. And VCs love that.
➔ In other words: the best way for you to find a VC… is to have the VC find you.
Clients want a clear value proposition… so do VCs.
When talking to clients, the best Salespeople prefer spotlighting customer benefits rather than technical specifications. Both for clients and VCs, Tech is just a means to create added-value for the customers.
PixelMe is the perfect example. Instead of giving a lecture on how pixels are way better than cookies, they put forth a simple value proposition: easily monitor your marketing channels. Doing the same with investors will generate good results. And don’t worry, once investors’ curiosity is aroused, they will look into the tech (otherwise don’t make a deal with them).
➔ Buzz words are your worst enemies, and are rarely efficient when it comes to talking to your clients… or VCs 😏
Network Network Network.
Just as colleagues will share their best deals for lunch, the best fundraisings are made between VC friends, a sort of “under the table” (of the Hoxton for sure).
➔ The best way for an entrepreneur to build a strong reputation in the VC world is to show great drive and ambition. In the best case, even though the VC you met couldn’t invest in your start-up, he will probably share with his fellow VC friends just how amazing you and your start-up are. If so, that’s all there is to it!
Relationship is everything
Signing a term sheet is probably as engaging as a marriage settlement (except without the baby bottles issues). Hopefully, we will work together for 7 to 10 years: humility, great communication, trust, and honesty are core values if we are going to get along.
Great Salespeople are humble as f*#K
This blew my mind when I first met Doctolib’s Sales Team (and basically everyone at Doctolib): they all believe in the SPAAH (Service, Passion, Ambition, Attack, Humility). Especially the H of Humility.
Long story short: I am convinced that one of the people who enabled such a strong and sound corporate culture is the CEO, Stan… and this humility has most definitely played a role in convincing Antoine, Olivier, and Marc (Kerala cofounders) to invest in Doctolib 6 years ago when the platform had a total of 0 Doctor.
➔ Being just as humble with your VCs as you are with your clients, is key to success. That implies acknowledging the most difficult forthcoming challenges, explaining what has failed up to now and being honest towards your surrounding competition.
Customer service is life.
We have all read Jonathan Lefèvre article on how Customer support was vital for Captain Train (click here if you haven’t). Great customer service aims at being honest, compassionate, receptive, concerned… Our daily discussions with entrepreneurs (when we receive an executive summary, prepare for meetings, ask for more information) reveal much more than the “Team” slide from the deck.
➔ The resilience to apply the best standards of Customer Success when talking to VCs (again: honest, compassionate, receptive, concerned…), even and especially in difficult situations, will really make you stand out.
90% of your potential clients consult customer reviews before buying. (1)
It’s exactly the same for VCs (if not 100%) and being obsessed with customer satisfaction is crucial in a VC assessment.
“In the end, the client will mostly use emotion to make a decision”.
Same for VC.
Nah, just kidding.
Send materials. And send them well.
The VC word for “commercial proposition” is “slide deck”. And the same rules should be applied.
Simple is beautiful.
A third of the decks we receive begin with slides explaining in detail how the company uses blockchain or how they implement machine learning, all that coated with specific and incomprehensible jargon and acronyms.
After reading the first slides 3 or 4 times and as I start to be somewhat lost 🤯, I often resign and end up checking their website … and surprise! More often than not, things are perfectly clear. Why is that? The CMO knows that to convince his leads, he would better explain first “what”, “why” and “for whom” than “how”. CEOs might want to know that too.
Most salespeople agree on this: speak your client’s language. And consider VCs as your most novice clients.
➔ Deck clarity is a good proxy for a VC to evaluate the forthcoming marketing clarity when you will have to explain your start-up to leads, partners, top talents and later-stage VCs. Thus, an unclear deck might be perceived as an increased risk of future execution.
And keep it short!
No Sales would ever send a loooong commercial offer of 50 slides, or a 10 000 words e-mail to a prospect they barely know. The client would never read all that.
Well… It’s kind of the same for the VCs.
➔ Stick to 12 to 15 slides in your Pitch Deck and use the e-mail as a teaser (huge market + great traction + amazing team).
Close your round!
Timing and updates
Marketing Teams love sending newsletters to clients and prospects on a regular basis to update them on new features, news of the team, etc. It is often a great way to help Sales close deals.
When it comes to VCs, you need to be a little bit more ingenious. The best deals aren’t shown to a large number of people (otherwise, it means they are not that valuable). Here are three recommendations :
1/ Only send news to 2 or 3 VCs, with a completely customized message in order to create a relationship.
2/ Best content include monthly KPIs (especially the MoM growth), new product features (and why it’s a killer), new recruitments, highlights, events… anything that emphasizes that your start-up is the hottest deal of the year.
3/ Additionally, you may ask the VCs for some help (for instance with recruitments, sales strategy…). It is a great opportunity to try out their added value.
Only the rich get richer
All the bullet points described above aim at making you look like an “A Player” when talking to VCs, using the sales techniques you implement every day. Applying these guidelines will hopefully get you through the first round of the investment process (basically having the Investment Team talk about your start-up in their weekly meeting). As for the rest, it’s up to you!
“The best Sales is hidden. There’s nothing wrong with a CEO who can sell, but if he actually looks like a salesman, he’s probably bad at sales and worse at tech”
Peter Thiel, Zero to One
To wrap it up / disclaimer :
- Keeping your deck as simple as your landing page is a great move.
- Raising funds is way harder than finding clients. However, being honest, humble, trustworthy, and a good communicator will always be appreciated, by both clients and VCs.
(1) Trustpilot
About Kerala Ventures
Kerala Ventures is a VC firm investing in early-stage French tech startups (SaaS, AI, data, marketplaces, tech-enabled services …).
The Kerala team is insanely focused on bringing massive support to its entrepreneurs in tech, operations and hiring (see first20.club). We have a unique know-how in developing startups from scratch and turning them into “unicorns” (Lafourchette, Doctolib, see our story)
Kerala Ventures invests from 100k€ to 1.5m€ in great entrepreneurs
