It's no secret that entrepreneurs need funding to launch or grow their nascent companies, and some will seek the support of venture capitalists (VCs) to fulfill their ambitions. For many entrepreneurs, myself included, pitching to potential investors is far from an enjoyable task; at times, it can even appear to be a wasted effort. According to this report, venture capitalists provided $29.5 billion in funding to 3,382 businesses in 2013, so they have earned an unfortunate reputation as a necessary evil in the startup world.
Part of the problem stems from the fact that aspiring entrepreneurs, particularly first-time founders, don't know how to engage or attract potential investors. Inexperienced entrepreneurs employ a blanket approach by giving the same rehearsed spiel to any venture capitalist who is willing to listen. In the end, nobody wins.
My current company, Retention Science, is my third business endeavor, and through the course of raising money for three companies, I learned firsthand how arduous and difficult the fundraising process could be. But it doesn't necessarily have to be the case. The negative stigma associated with securing funding isn't a given; it doesn't have to be a nerve-racking ordeal, and it certainly doesn't have to be a perpetual disappointment.
I've learned a few key tactics that can prove invaluable when pitching a company to prospective investors.
Don't Talk To Everybody
Contrary to popular belief, it's not wise to pitch to anybody who will listen (though it is understandably difficult to say no to meetings). Your time is just as valuable as the VCs and you should only meet with VCs who specialize in your field.
It is also critical to identify the right partner to pitch to within a VC. Every partner has different investment interests, styles and seniority within the firm. Start by targeting ones who are most likely to be interested in your company.
When I started Retention Science, we listed ourselves on AngelList, a popular funding platform for startups, and received around 25 intro requests, but we only took meetings with a select few that made sense for our company. For instance, I met with Katherine Barr at Mohr Davidow Ventures because of their proven track record with successful B2B enterprise companies like Rocket Fuel and Rally Software. They also had a known venture partner, Geoffrey Moore, who authored Crossing the Chasm, a respected publication on selling and marketing high-tech products like ours.
Look Into Your Own Network
One way to filter the investors you should meet up with is to target people who you already know, either directly or indirectly. After all, it is much easier for VCs to take an aspiring entrepreneur seriously when introduced by someone they already trust or know.
For instance, Andy Rankin, one of our earliest Angel Investors, introduced me to Kirsten Green, the founder of Forerunner Ventures. At the time, I wasn't actively seeking capital, and I had instead hoped to be given the opportunity to work with her impressive list of portfolio companies, including Bonobos, Warby Parker and Birchbox. As we continued discussions, however, Kirsten realized that many of her commerce-based portfolio companies had the exact same needs that Retention Science was addressing. Our conversation quickly shifted away from a sales angle to a fundraising one because Kirsten was interested in being a part of the company. The shift was very serendipitous and natural once we realized that we'd be great partners with each other. But if it weren't for the initial connection by Andy, we'd have never met Kirsten in the first place.
Research, Research, and Research More
Pitching to investors involves making a personal connection and telling a story they can relate to from their own investment experiences. A successful pitch is not only about the idea; it is about helping the investors to see your vision, size up the market, and, most importantly, foresee a profitable business model. Assuming you already know everything there is about your industry, make sure you thoroughly research everyone you will be speaking to so you can identify ways to connect on a personal level.
Whenever I confirmed a meeting with prospective investors at VC firms, I would thoroughly research all the partners who I might speak to. I familiarized myself with their previous investments, their philosophies, and their LinkedIn profiles, and I drafted notes and questions based on this information.
By the time I actually arrived at the meeting, I was able to modify my pitch to reflect the specific investment and professional experiences of the partners who were present. By the time I pitched for Retention Science, I convinced four partners from Mohr Davidow to sign on with us within a 24 hour span, the quickest turnaround I've ever had.
Be Yourself
Entities 0 Name: Retention Science Count: 4 1 Name: Kirsten Count: 3 2 Name: Kirsten Green Count: 1 3 Name: Geoffrey Moore Count: 1 4 Name: Katherine Barr Count: 1 5 Name: Birchbox Count: 1 6 Name: Mohr Davidow Ventures Count: 1 7 Name: Rally Software Count: 1 8 Name: Mohr Davidow Count: 1 9 Name: Research Count: 1 10 Name: Andy Rankin Count: 1 11 Name: Andy Count: 1 12 Name: Warby Parker Count: 1 13 Name: Rocket Fuel Count: 1 14 Name: Forerunner Ventures Count: 1 Related 0 Url: http://ift.tt/1AqQqsi Title: 7 Taboos of Business Pitching Description: Whether you're pitching your business to angel investors for the first time ever or just the initial round this week, your mission is to incite their passion and provide compelling evidence of a potential boost to their bottom line.
Post a Comment for "How I Raised Venture Capital For Retention Science"