From Thomas Hannes – Newion Investments (@thomas_hannes)
Most people hate preparations, it’s just the same as homework. But before you contact a VC there are some small preparations that will make a big difference. Working for a VC firm, I see numerous new pitch decks and request for contact and there is such a big difference between them individually. So what can you do to stand out from the crowd?
Do some research
First of all doing a little bit of research makes the success rate of contacting a VC that much higher. Some might prefer using a bulldozer to crack a nut, others like to use a bit more precision. When searching for funding it’s just the same. It is possible to work through a list of VC’s and contacting them all, but by searching what these individual VC’s stand for can have a big effect on you success rate. Every VC has a specific focus area and you can often retrieve the details of their focus area by scanning their webpage.
So when you got that great start-up idea making children’s toys in Amsterdam don’t waste time contacting a late stage VC that never makes an investment lower then €10Mio and is focused on FinTech companies in Estonia.
Try to get a warm introduction
Yes it’s true that a lot of VC’s state a contact email address on their website and this is the easiest way to let them know of your existence, but it’s almost always better to get a warm introduction then cold calling. Investors want to be introduced to you rather than simply meet you. Some blogs write that only 1 in 500 pitches (or even less!) that come in an office box gets funded. Others don’t state contacting details on their website anymore. The job of an investor is finding a needle in a haystack. This is why it’s very useful to use a network to make the first selection.
So how can you get a warm introduction? Well its actually quite simple. Venture capitalists are generally very connected people, so be creative and network, you are an entrepreneur!
Find out if you are ready for fundraising
fundraising costs a lot of time and there is no guarantee for success. A fundraising round can take several months (some blogs say up to 6-9 months) so don’t wait too long before you run out of cash. A fundraising round will give a lot of distraction for an entrepreneur and their team, so knowing if you are ready is very important. One thing that is always useful is to ask some fellow entrepreneurs. They might have some experience and can give you very useful advice, this way you don’t have to try to reinvent the wheel.