I hear on an almost daily basis a startup complaining about VCs, mostly about lack of response or lack of clarity. Having been both an entrepreneur and an investor I often find bell curves at work ie that a minority causes either a lot or almost no headaches, and a majority of cases that will occasionally have tension. Some of it is inherent given the asymmetric relationship — entrepreneurs are seeking capital, VCs have checkbooks. VCs incidentally have their own asymmetric relationship with their LPs, which is a topic for another day. What this post will focus on are 5 practical ways for startups to manage the friction ie minimize the exhaustion around dealing with investors.
1) Warm Call — get warm intros or even better double opt-ins.
VCs are flooded daily with messages and meetings and some of them or some of the time they are admittedly hiding behind them to avoid responding. But more often than not it’s simply a problem of too much noise, so leveraging a relationship of trust boosts your signal. Now you don’t need to ask everyone to introduce you directly, it usually makes sense if there is some context or pressing timing. But more often than not, it’s better to ask someone to send over your info to a VC offering to intro or asking to get in touch directly aka the double opt-in. If VCs are still not responding to you let it be, they are either not interested or have the bandwidth and if you force a meeting chances are it will just take up your own time unduly. Also, one or two non-responses is fine but if you are consistently getting crickets over say a month then reconsider your pitch.
2) Cold Call — if you can’t get a warm intro then be deliberate in your cold call.
Cold calls do work — if you provide enough substance with enough style. While there is no single magic formula, the general advice is to keep the message short but link to more information, ideally a shareable version of the deck. If you don’t know enough about the VC already then spend a few minutes looking at their portfolio and investment thesis to ensure there is a potential fit. Softer asks such as “let me know if / how we should follow up” is almost always better than a more aggressive “can we chat tomorrow?” Giving an investor the chance to decline gently when you don’t know each other can still lead to feedback or other intros than putting a harder ask.
3) Links > Attachments
If you use a platform like DocSend, Google Drive or Dropbox you can keep your deck always up to date while keeping the same link. In many cases, you also get analytics on who viewed what and for how long. Some platforms will also give you the ability to do access control ie have white or blacklists, or the emails of people who are viewing, which are choices for you to consider depending on how tightly you want to regulate your deck.
And links can get shared much more easily than attachments that can get lost when a message is forwarded. If the investor does ask for a hard copy you can email them or simply allow the download functionality in the platform you are using.
4) Newsletters Are Awesome
Tired of updating continuously investors who may be all over the map — brand new to you, already know you somewhat, are deeply engaged with you? Put all of them on your newsletter that you can consider sharing even during fundraising or more usually after you have closed an initial round. That way you can do high touch conversations selectively, and can even just forward the latest newsletter whenever someone is asking for an update. If you use a platform like Mailchimp, ConstantContact or SendGrid you can also get analytics and even detect when someone might be leaking information if that’s something you are especially concerned about. As a rule of thumb, keep really sensitive information for board meetings, the newsletter should be for broader updates.
5) Invite Them Occasionally To Happy Hour
Most startups will recap their week with a team meeting on Friday, end the day typically over food and drinks. Why not invite potential investors to join, say once a month? It’s an opportunity for them to see the company in action, meet more team members, and for you to save some time coordinating. If a 1/1 makes sense then just do it after the meeting. If you are worried about protecting sensitive information then invite the investors to join at the end of the meeting. If you don’t want competitive investors colliding at the same event then just stagger the invites. Bottomline there are very few reasons not to include potential / current investors and (partners, clients, hires etc) now and then in your core company activities, especially if you are not actively in fundraising mode and looking to strengthen relationships.