Swipe Right & Find Your Venture Capital Soulmate
by: Elizabeth Galbut, Founding Partner of SoGal Ventures
Finding the right investors is quite similar to an aggressive approach to dating. Whether you’re a fan of tinder, bumble, speed dating, or good old-fashion blind dates, all first-time founders can learn a thing or two from the typical dating quest to find your future partner-in-crime.
#1 Be ready: Trying to find investors when your company is not ready will be a slow, painful, and likely not fruitful experience. Just like you should get over your ex before putting up your new dating profile, make sure your company is in a good position before starting to fundraise. Have the core founding team in place and be committed to your startup full time, or make it clear which founders will be coming on full-time after the capital raise. Have a MVP created and know your company’s traction and growth data that demonstrates product-market fit. Create a cloud-based deal room with your deck, pertinent legal documents, team bios, FAQs and any other materials that will make due diligence easier for an investor. Practice your pitch with advisors and mentors to fine tune your deck and your speaking points to supercharge the impact of your pitch.
#2 Tell a compelling story: Make sure you have a consistent and cohesive online presence that also syncs with your deck. This includes your website/app, Angelist profile, press mentions, social media, etc. By telling a consistent and compelling story through various channels, you make it easy for a potential suitor to learn more about your company and if it’s a good fit for them. Similar to a first date checking you out on LinkedIn, Facebook, Instagram, or through a Google search — often an investor will do the same with your company before agreeing to meet. Make sure the investor doesn’t think you’re company is a hot mess because none of the info matches.
#3 Understand a good match: Similar to dating where you may have certain must haves like height, education, religion, or location — research and understand the type of investor you’re looking for. Most investors have specific investment theses that they abide by which can revolve around a variety of attributes including geography, industry, stage, types of technology, etc. Research which investors have already invested in companies similar to yours and make a spreadsheet with their names, emails, mutual connections, and any pertinent notes.
#4 Cast a wide net and be persistent: When trying to find your soulmate, the probability of you finding the one is much higher when you go on a dozen new dates a week, than simply confining yourself to a single new date each week. Set a reasonable but aggressive goal for how long the fundraising process should take. Have at least 100 investors you’ve targeted in the spreadsheet from above and either find a way to get a warm introduction or cold email them. Your goal is to get a first date with as many investors from your list as possible. Investors get a ton of email, travel frequently, and often get tied up putting out fires. If your first email doesn’t get a response, politely follow-up 3 days later, and again 1–1.5 weeks after initial contact.
#5 First impressions count: With some investors, you may only have one shot to pique their interest in your startup. Whether it’s an email, a Skype session, or a coffee meeting — make sure to be prepared, understand the investor’s interests, show up on time, and bring your best! Just like showing up on a first date, a friendly smile and sincere hello also helps kick things off on a positive tone.
#6 Don’t let rejection create self-doubt: Howard Shultz, the founder of Starbucks was turned down by 217 of the 242 investors he initially spoke with. Fundraising may be your hardest journey yet as a startup founder. Listen to the feedback you’re hearing from investors and if you hear frequent questions or concerns iterate your pitch materials, FAQs, and approach to grow stronger throughout the process. On the flip side, don’t change yourself or your company to fit the advice of a single investor. You have put your heart and soul 24/7 into the company and likely have a unique background that prompted you to solve the problem you’ve chosen to tackle. An investor may only spend 30 seconds to 30 minutes initially wrapping their head around your company, which means you should take what you hear with a grain of salt, rather than gospel of ultimate truth. Similar to a relationship that always fails when you want to change 27 annoying quirks about your imperfect significant other, or a partner that tries to fix and reinvent you — starting off an investor relationship in this manner is rarely successful in the long-run.
#7 Keep your options warm: An investor may initially pass or drag their feet, but a no can often be the first step to getting a yes. Unlike the random faces of tinder, investors all talk to each other. Be kind, grateful, and under no circumstances should you retaliate or burn a bridge because you’re feeling the sting of rejection. Keep a list of all the investors you’ve spoken with and send an update email with highlights of your company’s progress every month or quarter. Similar to the high school nerd that grew into his body and is a handsome hunk years later, you never know when an investor may see an update and suddenly better understand your vision and potential for your company. Since investors look at dozens of deals a day, it’s easy to overlook something great. Being one of the few founders that actively and consistently updates potential investors will differentiate you from the noise and lead to fruitful relationships.
#8 Do your own diligence: Just because an investor wants to invest in your company, doesn’t mean you should jump into the relationship immediately. Choosing investors is similar to entering into a marriage with your company. Unless you had a bit too much fun in Vegas, you wouldn’t walk down the aisle with someone you just met yesterday! It’s important to get to know the investor over time and work through problems and opportunities together to understand if you have long-term work-style chemistry. Additionally, ask the investor to introduce you to a few of their portfolio founders so you can get candid feedback on what it’s like to have the individual or firm as an investor in your company. As with everything in life, trust your gut. If something seems off early-on in conversations or you see red flags emerge, don’t just take money in desperation. An investor divorce is much messier than simply not taking the money in the first place. There are many fish in the sea, and very rarely do you truly run out of options.
#9 You don’t have to be exclusive: In contrast to dating, the majority of time you don’t have to only pick a single investor to work with. This means that you can find multiple investors who fit your strategic smart money goals, rather than trying to find the elusive perfect match who is your soulmate that meets your 128 criteria checklist. A great entrepreneur fills their seed round with strategic angels that can help their company grow (whether it be hiring, business development, technology strategy) and one or a few VCs that bring operational expertise and network access. By building out a team of investors that not only bring money, but also skills and expertise, you can greatly increase the pace at which your company grows.
#10 Have fun: You’re building something new that’s going to make the world a better place. Don’t forget to have fun and celebrate each success with your team! Rather than crying over the investors who are mean or sexist, laugh at their skewed and incorrect view of the world. You’ll likely have to kiss a few frogs before finding your superstar team of princesses and princes.
Craving more VC insider advice? Check out…
Ask a VC — Christina Bechhold, Investor at Samsung Global Innovation Center & MD of Empire Angels
Ask A VC — Ezra Galston, Senior Associate at Chicago Ventures
Ask A VC — Lu Zhang, The Chinese Woman Who Founded A VC Fund at 25
Ask A VC — Lisa Lambert, The Woman Behind Intel’s $125M Diversity Fund
