Once you have narrowed down your choice of a Venture Capitalist or Venture Capitalist Fund and found the right one to “court” as a means of funding your business, the next step in this process is to plan a Targeted Approach.
You need to do your research on your Venture Capitalist options and plan your pitches. Keep in mind that there are approximately 934 VC firms. These firms, at any given time, may consider 10 deals a day, knowing very well that they can only fund four a year. With this in mind, your motivation should be high for doing your due diligence beforehand.
Your due diligence should include consideration of the following:
- Industry Focus – who has invested in your industry before
- In Network – who are investors/funds that may be in your network
- Fit Their Portfolio – does your business fit their portfolio or is it totally outside their realm of expertise, to the point where they may not feel they can bring managerial experience to the table
- $$ to Invest – you definitely don’t want to spend time courting a funder whose monies have been depleted for the year
- Match of Size and Stage – is it the right size fund or investor that you need and is it geographically located to be of benefit
- Track Record – be sure to talk to other people who may have been funded by this person or group before
It’s also very important to keep these four points in mind:
- Venture Capitalist Firms like to invest in their area, industry of expertise or in a mission- related project
- Find connections anyway you can and make contact with them (who works for them; who is on the board, etc.) This is so important.
- Remember the Magic of 3 and Make it Personal – Before making your pitch, there should be three points of contact…all personal to the person with whom you want to work. This does not mean just email, a text or letters. Think out of the box on how to make a great first impression (i.e. a gift basket of product samples sent to the executive team). After you do your pitch, remember to do the same…another three touches or contacts to follow up. This is very much like grant funding; you need to do the work to earn attention.
- A Venture Capitalist website drop box or out-of-the-blue emails DO NOT WORK!! – You need to try and make contact before going through their portal; if they are asking for a full business plan, I would want to know more about them first.
You need to make sure the Venture Capitalist you’ve chosen knows you are out there and what you are about. This can include:
- Networking like crazy
- Using social media and blogs – create a buzz around who you are; let them know where they can find information on you; if you have a media or marketing plan, make sure the VC and your pitch to them is a part of it.
- Attending industry-related events and conferences
- Again…Create a Buzz!!
Now that you have taken time to Prepare, you’ve determined the Right VC or VC Fund for funding your business, and you have the steps for creating a Targeted Approach, it is time to begin working on The Perfect Pitch!
In the meantime, I’d like to hear about what you may have done as one of your “Magic 3” contacts or “touches” when approaching the Venture Capitalist you chose.