How to get a VC’s Attention
The Do’s and Don’ts once you get in front of a VC.
Recently, I went to Discussion with VC’s: Demystifying the Early Stages held at Galvanize NYC to get an inside scoop from one of the best on how to get a VC’s attention, and the Do’s and Don’ts once you get in front of them. The conversation explored outreach (what works and what doesn’t), pitch (what do say, what not to say), and generally what a VC looks for in an investment opportunity.
Meet the speaker:
Stephanie Palmeri is a Partner with SoftTech VC, where she invests in marketplaces, mobile services, SaaS, consumer health, and EdTech startups — including Poshmark, ClassDojo, Clever, Grovo, Panorama Education, Lantern, Phil, Survata and Thanx. She currently represents SoftTech VC as board member for Fatherly, Pared, Educents, and Envoy, as well as a board observer for numerous investments. She previously served on the boards of Chariot (acquired by Ford Motor Company), Niche (acquired by Twitter), and Spoon University (acquired by Scripps Networks Interactive).
Where did you get your deals from?
The best deals are generally from 2 sources, and in my opinion, the best source is from founders that we work with and know well. So, if I sit on the board, and you want to introduce a founder that is acquainted with you, is a really strong signal. Secondly, other investors — a combination of early pre-seeds, angel investors or later stage funds — that have met you and found it premature for them but you might still be interesting candidate to meet, are good signals too. Especially folks that put in their money are right signals and the wide network of everybody else in the ecosystem.
What are you looking for that makes you want to talk to the founders?
The string of my relationship to that individual and how much they think they would validate me is very important. In general, it’s the quality of return. Quick little filters such as: if you are raising the right amount of money that fits what we do matters too. We are also looking for space that we are spending a lot of time on and don’t have competitive investments. We do try to look at the team’s background too.
When putting in executive summary and pitch decks, what are the bullet points you need to know?
The very basics are: How much money are you raising? Who is on the team? What it is that you do? Any interesting statistics or background? Or something to share why this is interesting right now.
Are there big no’s in the first interactions, are there questions founders need to ask?
One of my biggest no is when founders bring their adviser and this usually happens to younger founders with advisers or chairman. The truth is I am not investing in your adviser or chairman. I am investing in you and your team that is going to debut your company. That old dude is not actually giving you validation in the meeting. The most important thing is about telling a story and connecting me through the story. As a CEO, your job is to constantly sell whether you are a salesperson or not. You are selling investors, people who are coming to work for you, customers, programmers and your employees. You really need a compelling story about what you are doing, why you are passionate about it and why, specifically, you and your team are going to do it.
What happens when you decide to do a deal?
First, you are meeting me or one of my partners and we will be calling back on a weekly basis to talk about the deals we are seeing or deciding, such as if this is interesting to share with another partner and to have a second set of eyes on it. Eventually, you will meet all my partners. Regarding the references validation, I prefer not to call them because they are very important people to you until my partners and I are excited for the deal. Then, it will be the process of the meetings and maybe asking you to talk to our lead engineers because none of us are experts on it. That question you should ask at every meeting with investors is what are the next steps in their process and what does their process look like. It is important for me to allocate 5–10 minutes at the end of the meeting to tell you about us if I think you are going to be there for us.
When founders get investment, they get board meetings, reporting requirements and start to freak out. What advice do you have to people who don’t get to the sideways with the board?
I don’t expect every board meeting to look like the board meeting for a growth stage company. I’m generally not surprised when founders change the format of their board decks over the course of the year, without learning what works better for them. Every month is probably overkill for board meetings, but I generally don’t need to go more than once every 2 months because a lot happens these days. The minimum is once a month, sometimes it is a board meeting, and sometimes it’s not. Communication is key between founders and board members. Board members generally do not like surprises. If there will be bad news in a board meeting, the best practice is to give an advance call or a heads up before the meeting. You want to be always in control of a session.
