I never imagined that being an investor would involve dancing pandas. However, I bet most founders never imagined where their journeys as entrepreneurs would take them either.
Now that I have been a participant in more than a few off-the-wall investor meetings, one thing is clear: Off-the-wall tactics usually don’t work. VCs won’t abandon their professional judgment and investment strategies just because you’ve abandoned a few social norms.
What we look for is not predictable or formulaic: Are these exceptional founders? Could this be a large market opportunity? Do we believe they can build a transformational company?
Just because your product is unusual, that does not mean your approach to meeting investors should be. While I applaud the creativity, passion, and drive that some entrepreneurs employ to get in front of investors, there are some tried-and-true do’s and don’ts that will improve your odds.
Do get an introduction from someone the investors know and respect. Ideally, this is a successful founder in their portfolio who can provide a positive reference for you. They will automatically give you credibility going into the conversation. Moreover, this founder can alert you to the strengths and weaknesses, likes and dislikes, etc., of a particular investor. They can even help tailor your story.
Even if you don’t already have a Rolodex of venture-backed entrepreneurs, start building one before you need to raise money. Those relationships will be critical in countless ways as you build your business, not the least of which is fundraising.
Don’t tell investors to “destroy the evidence” of your idea before a pitch. While selective paranoia can be a productive trait for entrepreneurs, you can’t be paranoid about sharing your idea with investors. Please don’t demand evidence that they have literally burned your pitch materials. Particularly with professional investors like venture capital firms, their reputations are more important to them than any single idea, so “stealing” your idea isn’t in their interest. VCs are not in the business of starting companies with the ideas of people who pitch them. They invest in great entrepreneurs.
Your idea may be brilliant, but it’s only a small piece of the journey. Execution is what will set you apart and win in the marketplace. And, you know what they say about ideas and opinions …
Don’t over-prepare. This might sound counter-intuitive, but you should not memorize your pitch. Do not deliver a stilted, canned sales pitch. You should tell a story and be able to weave it into any conversation, in any sequence, without sounding like you are pitching. So while you should indeed practice telling your story incessantly, it should not become a speech you memorize and try to recite word-for-word, identically, every time. It should be a conversation that communicates the same key messages every time, but that story could be told a hundred different ways depending on the audience, their questions, and where the conversation leads you.
When you practice your pitch, ask yourself: Does it communicate why your team has some unfair advantage that will ensure you win? Whether it is your background, domain expertise, or something else, your pitch has to make investors confident that you will succeed.
Make sure you are telling investors things you know, not just what you “think.” You should be ready to present results from experiments, market data, customer development metrics, or marketing tests – not just your opinions.
Don’t show up on their doorstep unannounced. Starting a company takes dogged determination, endurance, ingenuity, and tenacity. So I can certainly appreciate the sentiment of tracking someone down if you need something from them. But showing up at someone’s office unannounced and interrupting a meeting to introduce yourself is the wrong way to be tenacious. In the midst of getting things done, entrepreneurs also need to display good judgment.
In the right context – at a networking event, fundraiser, or even a social occasion – you can jump on the chance to meet investors, but take no more than one or two minutes of their time. Introduce yourself, tell them something memorable, and try to get an email address so you can send a proper introduction later. That will make a much better impression than trying to force a drive-by meeting in an investor’s lobby when they’re on their way to another appointment.
Do learn to take “no” for an answer. Yes means yes, and investors won’t hide their interest if they want to invest. Sometimes “no” is less clear. For the most part though, anything that is not a definitive “yes” is a “no.” Investors may sometimes be vague or make a diplomatic excuse. They may be afraid of offending you and missing out on a later round of a great deal.
Once, after giving a clear but respectful “no,” which included some friendly, constructive feedback, I had a casual run-in with the entrepreneurs in which they were so aggressive that I literally feared for my physical safety. If the line between persistence and aggressive stalking becomes fuzzy, you know it’s time to stop. The way to get VCs to chase you is to walk away, not push harder.
Don’t bring along a significant other (unless he or she is your cofounder.) Much more frequently than I would expect, entrepreneurs bring a girlfriend or boyfriend to the pitch. I inevitably ask these people about their role in the company. When it turns out that they have no role and are just tagging along, it tends to raise some red flags. It’s especially alarming when a boyfriend or girlfriend answers questions on behalf of the entrepreneur!
Pandas Suits. In one of the most memorable “meetings” we’ve ever had at Mucker Capital, the founders showed up in panda suits. Dancing. While they did get points for creativity, that flavor of creativity isn’t enough to seal the deal.
If the market opportunity is limited, the team is not strong, or you can’t tell a compelling story, even dancing pandas won’t save you.
Erik Rannala is founder and managing partner at Mucker Capital.