Chapter #4: Securing a Face-to-Face Meeting
Raising your Seed Round — a Playbook for Israeli Entrepreneurs
After discussing how much to raise in Chapter #1, the various sources of funding in Chapter #2, and VC organizational structure in Chapter #3, Chapter #4 provides guidance on how to secure a face-to-face meeting with a Partner, the next step in raising your seed round.
Before you begin, decide on the tools you’ll use to track and manage your investor list. Google Sheets are an easy way to get started, followed by more advanced tools like Trello, and CRMs like Streak & Pipedrive. Once you’ve decided on your toolbox, begin building a list of relevant investors. Using a database like SNC, it’s pretty easy to get all the info on the funds investing in Israeli start-ups, including their stage and industry preferences. If you are raising capital for an enterprise SaaS business, you should exclude automotive and hardware specialists from your list. If you are raising for a cybersecurity business, you should prioritize cyber specialist VCs and spend more time thinking through the best way to market to these higher priority investors.
Before discussing effective marketing strategies, keep in mind that every investor that spends time with you is by definition not spending that time with other entrepreneurs. So what will give investors the confidence to spend time with you rather than another entrepreneur? The first and most important factor is your track record. All investors predict the future by studying the past. If you have a track record that includes one of the following, investors will want to speak with you.
- Exited a previous start-up as CEO
- Exited a previous start-up as co-founder
- Joined a start-up that exited as an early employee
- Joined a start-up that exited as a later employee
- Ex-intelligence unit officers & team leaders
- Product managers or team leaders @ Google, FB, Amazon, Intel, and other large tech corporates
- Domain experts solving a problem they dealt with first hand in their previous jobs
- PhDs commercializing IP
- Former VCs who have had enough of the dark side
- Failed at a previous start-up that raised money but was a victim of macrotrends
- Took a previous business to profitability but could not sell it
- Already backed by a notable angel
If your track record fits none of the above, you will probably struggle to secure a meeting with a Partner without impressive traction. The reality is that you are competing with these 12 track records for attention. Without showing something super interesting from the market you’re targeting — successful pilots, paying customers / users, and/or extremely interesting IP, your chances of capturing and sustaining Partner attention are extremely low. Given this backdrop, you can now segment your marketing efforts into two categories; online and offline, and three tactics: inbound, relationship, and outbound.
Inbound Marketing captures an investor’s attention via content or word of mouth, and they reach out to you to learn more about your start-up. Always ask how the investor heard about you to get more clarity on the best performing marketing channels.
In the inbound scenario, you start from a place of strength since the investor finds you interesting enough to approach you and you can more easily control the conversation dynamics. The optimal scenario is if a Partner approaches you directly. However, most inbound leads will come from investment professionals because their most valuable currency for building credibility is investment opportunities, or dealflow, that the Partners would have otherwise missed.
To optimize the interaction(s) with an investment professional who has approached you, it helps to understand their motivations. Investment professionals improve their credibility by bringing good dealflow, and damage their credibility by bringing dealflow that the Partner(s) think is a waste of time. “Good” dealflow must meet certain investment criteria, which I will discuss in more detail in Chapter #5 next week. To meet this criteria, sometimes you’ll need to share materials, have a call, and/or have a face-to-face with the investment professional to convince them that by bringing you in for a meeting they will improve, not damage their credibility. As discussed in Chapter #3, investment professionals can be your champion in the investment process and help your company regardless, so aim to build a relationship rather than see them as an obstacle.
Relationship Marketing leverages your network to get a warm introduction. If you already have a personal relationship with a target investor you can approach directly and bypass the third-party. But assuming you want to reach investors outside your first degree network, consider this flow:
1. Confirm your mutual contact feels comfortable making the intro
2. Provide him/her with an email that can be forwarded to the relevant Partner or professional at your target investor with supporting marketing materials
3. Follow-up after the intro to secure a face-to-face meeting
This can mean both following-up with your mutual contact to make sure an introduction is properly made, as well as following-up with the investor after the intro, as sometimes an intro email can get lost in the inbox.
For relationship marketing, keep in mind the hierarchy of trust in the mind of a VC, i.e. which sources he/she takes the most/least seriously. The more credible the introducer, the more likely the investor will get excited by the opportunity. In other words, a warm intro from a successful entrepreneur, angel, or industry expert has a higher probability of converting to a meeting than from a service provider. Furthermore, when investors meet you in person, the source will have some degree of influence on their level of bias — the more credible/trusted the source, the more interested they will come to the meeting. Even beyond the initial meeting, during internal discussions, the source will usually come up as a discussion point which can either improve or reduce your chances at moving to the next stage.
A quick note on using a “finder”. Occasionally founders hire investment advisors to manage the fundraising process on their behalf. Most VCs in Israel prefer not to work with advisors at the seed stage, as they don’t want 5% of their investment going to a non-productive asset. Unless you are extremely experienced in your domain, have a long & proven track record, and have never spoken to VCs, this type of relationship marketing is likely to yield negative results.
Outbound Marketing means approaching investors directly. The outbound method signals that you are bad at networking and/or marketing because Israel is a small country where everyone at most three connections removed from each other. If you weren’t able to find a mutual connection and really want to get in front of a specific investor, at least justify in your approach message why you decided to take the easy (and much less effective) marketing approach. My advice — avoid outbound marketing unless it’s offline. For further commentary on this topic — check out Yaniv Golan’s post, “Don’t cold email VCs except sometimes you should”.
The previously discussed tactics apply to offline marketing as well. In an offline scenario, such as an event, you can either a. Get approached (inbound) by an investor, b. Get introduced (relationship) to an investor, or c. Approach (outbound) an investor. Offline marketing usually converts at a higher rate to a follow-on meeting because a. It’s harder to reject someone face-to-face, and b. You stand out from the other entrepreneurs who are only doing online marketing. So while you analyze your target list, also research which events attract VCs, and what you need to do to get invited.
To execute effective online & online marketing, you need to develop solid marketing materials that will support your efforts to gather interest from your target investors. Although occasionally you can get a face-to-face meeting without presenting any materials, this is the exception. Most of the time, even through a trusted connection, the investor will want to review a paragraph describing the business & team at the minimum, and a full investor presentation at the maximum. This actually serves you as well by eliminating investors who are not relevant. If you’ve done a good job of qualifying and building your target list, then the content in your marketing materials should increase the probability of getting a meeting, and you should feel comfortable providing these materials in any marketing scenario.
If you are wondering whether or not to have your marketing materials professionally designed and the content professionally reviewed — do both. VCs see so many presentations and so much content that the ugly and poorly written materials get rejected at a much higher rate than the beautiful and well-written materials, all else held equal. Also, your marketing materials, and all communication with the investors should be in English.
Now that we’ve covered the basic approaches to marketing, let’s close this chapter with a brief discussion of handling rejection, something you will inevitably face as you begin to interact with investors. Rejection can come in various forms, and it can be frustrating to get rejected before you’ve had a chance to make a face-to-face impression with a Partner, especially if you disagree with the rejection logic. Even more frustrating is the silent treatment, where an investor says they will get back to you with an answer and fails to do so.
If you disagree with the rejection logic, feel free to push back. After all, VCs are not perfect, make cognitive processing errors, and reach incorrect conclusions. If you push back and the VC doesn’t change their position, accept the rejection with grace by thanking the VC for their time and feedback, and follow-up once you have some exciting news to share.
If you get the silent treatment, feel free to follow-up at least twice — sometimes the silence is a function of travel, personal emergency, information overload, or limited capacity. Don’t take the silence personally, but if you follow-up twice and get no response, move on. Once you have some interesting news to share, feel free to follow-up again in a month or two.
In rare cases where you feel like you’ve truly been mistreated, escalate to someone higher in the organization — giving all of the prior context in a non-accusatory manner- and hopefully yielding some clarity.
Assuming you’ve marketed to your target list effectively, you’ll have reached the stage where you start receiving invitations to meet face-to-face with Partners. Congratulations! In next week’s post I’ll discuss how to prepare for these meetings.