Venture Capital

4 Insider Tips From VCs

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There is no one right way to raise money. But if you decide to go the venture capital route, how do you connect with and inspire confidence in investors?

At a recent event hosted by co-working space AlleyNYC, a trio of established venture capitalists gave an audience of up-and-coming entrepreneurs the inside scoop on what captures their attention in the startup world. Panel participants included Adam Carver, a principal at MESA Ventures; Aaron Holiday, a co-founder and partner at 645 Ventures, and Stephanie Weiner, an analyst at Bain Capital Ventures.

Read on for four takeaways on what venture capitalists want to see from entrepreneurs.

Related: The 3 Ingredients You Need to Impress a VC

1. Research extensively to come up with the right contacts.

Find out the best way to get in touch with the VCs you are interested in pitching, whether it's email, LinkedIn, Twitter, a warm introduction or in person at industry and networking events they frequent or office hours they hold. Look for the firms that often work with your industry -- if you run an online retailer, you don't want to run after a fund that primarily deals with biotech. Be aware that some firms only fund with early stage companies, while others work with business that are later in the game. "I'm more likely to take a meeting [with a company] that's outside our scope that's in an earlier stage because they might pivot," said Weiner.

2. Build relationships.

It's never too early to reach out to a potential investor, even if you aren’t ready to fund raise. Integrity in all your dealings is paramount, because your name and your reputation will carry you through failure if it happens to you. If you impress a VC with your pitch and your drive, they can be the ones that make the warm introductions to fellow VCs that do handle your industry or fund raising stage. But always remember that everyone involved is a person, not a dollar sign. "It's important not to take people for granted," said Holiday.

Related: Angels vs. Venture Capitalists: How Do They Think?

3. Be creative.

It's important to have all of the information they need to know before they invest at the ready, but you don't need to follow a strict formula to get their attention, especially with regards to the "let's get coffee" pitch meeting. Carver suggests hosting a breakfast or holding your own event and inviting fellow entrepreneurs and investors. As for pitch decks, he's all for originality, but recommends staying away from buzzy -- but ultimately empty -- titles like "CEO/Rockstar."

4. Details are everything.

When you're going in to pitch an investor you have to know your numbers and models better than your own name. Investors want to know upfront the credentials of you and your team, the market conditions and competition, the problem you are solving, your data (customer base, sales, the number of products you are manufacturing and your plans for scaling/growth) and they want to you to be able to tell them something they don't know about the industry. 

Related: Why VCs Don't Sign NDAs and You Shouldn't Worry About It

Edition: November 2016

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