How Do You Become Become The 1% That Gets Funded?
“How
many crappy startups are there?” I asked Dave and Alain, two partners
at the VC fund where I was an EIR. We had just sat through another pitch
from a hopelessly lost CEO.
[Do you want to grow your business? Maybe I can help. Click here.]
“Too
many,” Dave said and we all laughed. Then Dave continued, “And
remember, these are the companies we meet with face to face. There are
another two companies we don’t meet with for every company we do meet
with.”
I just shook my head.
Yes, it should be hard for you to get funded.
It’s
like, Barry, the Chairman of the Board of my company said to me one
day, “This is the NFL.” What Barry meant is that when you raise money
from VCs, you are in the big leagues.
This
isn’t high school football, only the best of the best get to the pros.
And it’s the same for raising money. Only the best of the best startups
will get funded.
So the better question you should be asking yourself is what do you need to do to give yourself the best chance of getting funded?
The
Venture Capital model isn’t broken. The bar is appropriately set very,
very high. So instead of wasting energy on what’s wrong with Venture
Capital, you should focus on yourself and your company.
Let’s assume you have a company that’s in a segment that VCs are active in. The maybe you should look at…
A. How well you are executing.
If
you’re not executing well, and your company isn’t growing fast enough,
then why do you think you’ve earned the right to get funding? The answer
is you haven’t.
It’s
like, Erwin, one of my potential investors said to me, “You’ve done
everything you said you would do.” Erwin had passed on us during our
Series A fundraising (remember, there’s always another round), but we’d
executed our plan, and that wasn’t lost on him.
It will not be lost on your potential investors either if you execute your plan. Then…
B. You should always be prepared every time you meet with a potential investor.
Dave,
a partner at the VC fund I was an EIR at, said to me, “You never know
what’s going to happen when you open the door.” In other words, Dave was
saying you don’t know how good any entrepreneur is going to be when you
meet with them.
Think
about how refreshing it will be for a VC to meet with you if you have a
great company that is executing your plan and you’re prepared for the
meeting. You’ll be the exception, not the rule.
So rehearse a little bit. Research the partner you’re going to meet with, and…
C. Make sure you make an impression fast.
VCs
are not the most patient of people. If you don’t get their attention
quickly about your company is that 1 in 100 company, then the odds of a
successful meeting go way down.
So
make sure you explain immediately why your company is significantly
better than any competitor. You don’t have time to gradually build your
story. You have to get there in maybe seven seconds or less. Oh make
sure…
D. You only bring team members that are going to add value.
I’ve
sat through pitches where it takes over 20 minutes to get through
introducing your team. Talk about a rally killer. You’ve lost before you
started when you do that.
Remember,
your goal is to raise money, not to appease the egos of your cofounders
and executives. That means you might need to leave a few people back at
the office. Finally…
E. Have your backup slide deck at the ready.
Do
you really want to separate yourself from the pack? Then have a backup
slide deck ready that has the answers to frequently asked questions that
don’t fit your pitch deck.
That’s how you keep the momentum going, and that’s how you become that one company in one hundred that gets funded.
For more, read: How Do You Extend Your Runway Before Raising Money?
Do You Want To Grow Your Business? Maybe I Can Help. Click Here.
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