Don’t send lengthy emails. Don’t contribute to the overwhelming information overload. Put a little more effort in reaching out to a potential investor. In fact, Steven Dietz uses introductory emails as the first filter in the funneling process.
Out of 4,100 business plans, 400 meetings are arranged, and out of those meetings, only ten lead to a future investment. That results in an investment rate of 2.5% of over 4,000 business plans and introductory emails. Cut through the noise and make yourself interesting from day one.
The ultimate goal of a VC meeting is to establish a two-way dialogue between aspiring founders and investors. “Make us interested in learning more about your business”, Dietz states. “Establish a good dialogue, and you’re long ahead of competition.”
Best presentations do not involve any slides. You should be able to sell your idea through interactive and engaging dialogue. “In the end, we always invest in the individuals behind the venture. It’s really all about the team.”
Surround yourself with great people. Do you really understand this business? Does your team possess domain expertise in this particular field? “We’re always looking for easy ways to filter out startups, and meeting a team without charisma or healthy group dynamics makes the task a lot easier.” Bring one or two people from your team along – this way the investors will have a chance to see how your team works together.
In the meeting, you should focus on the business opportunity of your company. What is the purpose of your venture? What problem are you willing to solve? “Most importantly, you need to be able to define your solution to a real problem very quickly and in an understandable way. It shouldn’t take more than a couple of minutes. If it takes longer, you really haven’t thought it through.”
Although the “Why Now?” is rarely addressed in any presentation, Dietz asks this particular question in all of his meetings. “Ask yourself – why is this the right time? Why now and not two or three years ago?” Simply put, the timing needs to be right. Spend enough time to think about this, and you will have more room for dialogue in the meeting.
“I usually lose interest at this exact point”, Dietz points out. Make sure you know the numbers. Without feasible numbers and analytics behind your venture, the meeting will go from good to bad in seconds. What is your total market size? What size of the market are you truly capable of addressing with your business plan?
Competition will always be present in the game. But do you really understand your competition? Are you able to differentiate your company from the rest? “If you don’t fully understand your competition, you will have a hard time getting an investor on board.”
You should always have a clearly crafted business model, but it shouldn’t include too much detail. There is no need to bring packed Excel sheets into the first meeting. “For the next three years, you should be able to calculate the following numbers – revenue, COGS, operating expenses, and cash burn. That’s all you need.”
In the meeting, talk about what you are going to prove and accomplish with your venture. Do not point out what you are going to do with the money. “After all, you should leave us investors with the feeling of tremendous urgency. We should feel the need to act fast.”
Photos by Sami Välikangas, Samuli Pentti, and Jussi Hellsten
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