How to approach venture capitalists

Every day, I receive emails from entrepreneurs seeking funds for their promising companies.  In reviewing today’s email, I decided to post about approaching venture capitalists.

Rule #1: Don’t send a “Dear Sir” email just out of the blue!!!  Especially in my case, as “sir” doesn’t quite fit….  But seriously, I get so many emails from entrepreneurs that have done 0 homework to see if their venture fits in the areas that interest me, or my firm.  An email out of the blue requesting funding for a biotech company in Florida – now really! 

Rule #2: Find somebody that can make a personal introduction to the venture firm.  You can not compare a cold email, to a note sent from a friend, former colleague, neighbor, ex-army buddy, etc., etc.  Considering the amount of email that everybody gets, you need to rise above the noise.  We get most of our deal flow through our network.  The challenge of the entrepreneur is to find that person that exists within our network - and theirs.  Given the size of our networks, this shouldn’t be too difficult (especially in Israel!). 

Rule #3: Research the venture capitalists background.  Make sure there is a fit between what your company is doing, and the investment focus of the partner and firm. 

Rule #4: Do not approach 20 funds at once.  A deal that is heavily “shopped” is one with lower likelihood of being funded.  Seek out the 4–5 partners that fit; after that point stop, analyze the feedback that you’ve been getting if it’s not progressing, and see what needs to be done to change that pattern.

Rule #5: Keep your opening pitch short.  Fundraising is essentially a sales job, only you’re targeting a different customer base.  I like to see a paragraph the describes what the company does.  You should be able to get the message across, so that the venture capitalist can judge if there’s a desire to learn more.

Hope this is a bit helpful.  We really do appreciate those entrepreneurs that work hard to get to us the “right” way.  It’s a good indication of what’s to come in the future.

Tags: venture+capital, fundraising, venture+capital+funding

Comments

[Yukl]

This is quite clear and illuminating, thanks. Now I have to figure out who is in tour network.

[Guy Grimland]

good post:) how many emails you get per 1 day?

[Eze]

Hi Talia. I enjoyed reading your post. I hope you don't mind me echoing your rules:
http://goisrael.blogspot.com/2007/07/learning-from-other-peoples-mistakes.html