Growth5 Blog

Tuesday, July 21, 2009

Approaching VCs

Mark Suster of Both Sides of the Table wrote this interesting post on how to approach VCs. Some highlights:

Your ability to approach VCs successfully is likely a decent sign of how you will:
  • succeed with tough-to-reach clients when you're selling your product;
  • find journalists to write stories about your new firm; or
  • get top-tier employees to join your firm when you are short on cash and nine months from bankruptcy.
Getting in the door is a test of your entrepreneurial skills. Here are some people that can help:
1. Start-up oriented corporate attorneys. If they think you will be a paying client it is in their interest to help you in your VC search. You can get great local info from them about who they think are the top VCs in your area of expertise and which person at the VC firm would be the best for your deal.

2. Start-up focused recruiters. Some recruiters aren't that great and have given the good ones a bad name. The good ones know everyone and can make that warm introduction to a VC. If you don't know a good recruiter, ask the folks in #4 below, they will.

3. Portfolio companies. You can always approach senior management of a VC's portfolio company and ask them to a 30-minute coffee to talk about fundraising. Bring something to the meeting that's helpful to them. Develop a relationship, ask them for an introduction to their VC. A lot of VCs rely on their CEO network for deal flow.

4. Fellow entrepreneurs. Talk to a bunch, you will start to get an idea of the good VCs in town, the ones to avoid, etc... Finding entrepreneurs who have just been funded would be ideal.
My strong advice is to try any of the four paths listed above. Blindly sending your business plan has very little chance of success. For me personally, I am not just investing in your idea, I'm investing in you. Very few business plans, if any, stand on their own.

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