As a startup lawyer and strategic advisor in Silicon Valley, I find that a significant percentage of my overall time is focused on helping startup founders learn and manage the venture fundraising process and tactics.
One of the most common requests I receive from my clients (and many others in my broader network) is for introductions to venture capitalists. They also ask me for advice on how to ask for introductions from other connectors in their network.
Connecting with VCs is an issue that not only freshly minted MBAs struggle with. In fact, most founders need help with VC intros, even if just because the VCs they do know invest in companies outside of their space.
My VC friends frequently ask me to help make intros to great companies as well. Considering how few startups make it big, VCs need to pound the pavement as hard as CEOs do, perhaps even more, in order to find the best deal flow.
The bottom line is that no one on the planet has an ideal network to pick and choose from as needs arise. All of us need help, and should ask for help, in order to accomplish our goals. As the saying goes, no man (or woman) is an island.
That being said, while I desire to help my network with useful introductions, there are times when it can be rather difficult for me to be of service.
In an effort to set them — and hopefully others — up for success, I’ve come up with a few pointers that all startups should keep in mind when approaching their network for VC intros that ultimately lead to funding.
Make my job easy. It is human nature that if you send someone an e-mail that requires them to do a lot of legwork, they will often de-prioritize it (in the absence of time sensitivity). Avoid falling into that trap.
I love it when founders send me a list of specific investors they would like me to approach on their behalf. That list should be based on of our mutual second-degree LinkedIn connections, preferably.
I recommend that they also send a two- or three-paragraph summary of their company, in a fresh email that I can forward easily, with links to their LinkedIn profiles. The e-mail should articulate the context for the introduction, in as few words as possible. An executive summary or a pitch deck of no more than 10 slides is great too.
An opportunity for personal connection is always helpful, e.g. “you both graduated the same year and from the same high school – perhaps you have some mutual friends.”
The summary of the company should include its stage (e.g. pre-product), desired round of funding (e.g. seed), and sector (e.g. security). Then all I need to do is hit forward. Easy breezy!
Be mindful of your ask. A real life example: I recently introduced a startup team to a partner at a top-tier venture firm who invests in their sector. When the partner replied that he would love to meet them, the founders replied saying that they were recently introduced to another partner at his firm, and they want to meet with her instead. This kind of gaffe is embarrassing, and frankly, makes me look like an idiot.
Founders need to remember that when they ask for intros, the person making the intro is using her social and professional capital to do so. Therefore, please take caution not to hurt the introducer’s reputation in the process; otherwise, they won’t help you again in the future.
Be prepared. I can help you get your foot in the door, but I can’t guarantee you a successful outcome, particularly if you aren’t prepared. After I make the intro, the VC (and/or her team) may have some follow-up questions before she decides to meet you. You must be prepared to give carefully considered answers.
Prior to sending it to a VC, your pitch deck should be well-vetted and you should have gone through multiple iterations. The financial model, in particular, should be well thought out.
This may sound obvious, but practice, practice, practice your pitch before showing up to meet the VC. I even advise using a public speaking coach if you don’t have a lot of experience making presentations or it isn’t your strong suit.
Oftentimes, the meeting will migrate from a slide presentation format to more informal Q&A, and you should be prepared for that.
Just bite the bullet on confidentiality. Nearly every founder still in stealth mode who asks me for an introduction is reluctant to send too much confidential information via email, particularly around their intellectual property, due to fear of it escaping outside of their circle of trust.
I understand wanting to protect your “secret sauce,” but if you don’t give me enough information about your technology and business model, your company is unlikely to appear sufficiently interesting or unique to the VC to warrant a meeting.
VCs are in the business of reading hundreds of pitch decks; the good venture firms have a vested interest in maintaining confidentiality because their reputation is on the line.
You can’t necessarily guarantee airtight confidentiality but at the end of the day, there is a risk-reward balance. The occasional VC may be willing to sign an NDA but it is not the norm. If they do sign an NDA, it will be following significant negotiation. In the interim, they may lose interest in your company because they perceive you as high maintenance.
The exception to that is if you are already hot stuff and they are chasing you.
Do your homework. Another real life example: I introduced a founder to a VC at a top-tier firm at the founder’s request. The VC was intrigued and the meeting happened. During the meeting, the founder proposed a raise of $2M. Unfortunately, the company was rejected because that venture firm doesn’t invest less than $5M per company.
The founder could have easily avoided this outcome by conducting some basic online research beforehand (e.g. the venture firm’s website, Quora, AngelList, TheFunded, Crunchbase, CB Insights).
Know the fund’s investment thesis and approach as well as portfolio companies, to the extent those are public. Most of the time, a VC will not fund your company if they have already invested in a direct competitor, nor is it in your best interests that they do so.
Use your strongest link. All introductions are not created equal. Before moving forward with an introduction, assess who in your network has the strongest relationship with the VC you are seeking to meet. Typically, the best introduction will come from a senior executive of a VC fund’s portfolio company (current or already sold), or from CEOs of other companies or your advisors with industry experience.
Other VCs can make solid introductions, so long as they don’t invest in your space and at the stage of investment you are seeking. It is far from ideal for a VC to introduce you to another VC as follows: “I passed on this company but perhaps you’d be interested.” No one wants leftovers.
Know what you want. Founders often ask me whether I think it’s a good idea to meet VCs well in advance of the fundraising process. Yes, it is. But just make sure you have a clear idea of what you want to get out of that meeting. Also be aware that once you meet a particular VC and they pass on your company, it may be hard to get a second meeting.
If you are asking for an introductory meeting, you should show that you have good traction and are on an upward trajectory to entice the VC to stay in touch. It’s also a good idea to ask the VC what they are looking for when investing in a company. Spend time getting to know the VC on a personal level if at all possible, and see if she is a good fit for you.
People invest in people they like, and people that they are confident can build and scale a successful business.
Minal Hasan is a Silicon Valley native and recovering journalist, startup coder and product marketing junkie. By day, she is a business lawyer to technology companies at Pillsbury Winthrop Shaw Pittman LLP. She is also a strategic advisor and angel investor to a number of technology startups. She is a frequent lecturer and speaker on the topics of startups, venture capital, education, STEM, India, and women in leadership and technology. She’s on Twitter as @minal_hasan.