We recently discussed what not to do when meeting with a VC for the first time. Ranging from over-ambitious financial projections to missing the “no,” there are any number of ways to make a bad impression.
But what should you do in that all-important meeting? Each VC has a different checklist when it comes to evaluating startups; while some may value the founders above all else, others may emphasize having an in-depth knowledge of the market. That being said, there are some things all startup founders can do before, during, and after pitching a VC that can potentially give them a leg up on their competition:
- Understand who you’re talking to. VCs can do much more than sign checks. They can mentor young companies, facilitate business connections, and provide benchmarks against companies with similar business models in their portfolio. To gain such a valuable resource, you’ll want to do your homework not just about your company’s market, financials, projections, and competitors but also on the VC firm’s people, fund, and portfolio. You’ll want to find connections between what you do and what the VC cares about, and you want to make sure those connections are present in your pitch deck. You’ll also want to note the VC firm’s fund size – if the firm has a $50 million fund, it will probably be wary of giving you $25 million, for example – and whether or not the firm is approaching the end of the fund – meaning the remaining capital may be more difficult to come by to all but the most outstanding startups.
- Explain how the VC’s money will be used. VCs want to see how you’ll be investing back into your company and how you’re planning on growing over the long term. By explaining that you’ll be building an experienced team or hitting the next step in your timeline, you’ll show the VC how you prioritize and how well your business plan reflects the immediate day-to-day needs of your company. VCs do not want to hear, however, that you’ll be using the funds as your salary!
- Ask the right questions…and let the VC ask questions, too. Obtaining feedback from VCs gives you a great chance to improve your pitch – and your company. These are individuals who’ve seen hundreds of pitches from companies in a variety of fields. Take advantage of their knowledge and learn about their concerns, apprehensions, and suggestions. After the meeting, evaluate your strategy and business plan, taking their feedback into consideration. In addition, you want to make sure that you have every opportunity to address even the slightest doubt about your company before the meeting comes to an end. This also gives VCs the chance to see your motivation and dedication to the company you’re building.
- Provide value in your follow up. Your follow up is yet another chance to impress VCs. Go beyond a simple thank you or reiteration of your pitch deck by showing you’ve listened and learned from your meeting. Further address a concern by backing up your statements with numbers, show your interest in a current portfolio company by showing how your product or service could improve its bottom line, or offer customer feedback in the form of case studies to showcase how your solutions are meeting a direct need. Reflect and respond to what the VC noted they would like to see from your company in the future, and don’t be afraid to respond in the future when you cross those milestones.