There is no shortcut. There is also no magic formula. The key is in the preparation and in knowing your market, product / service, and in communicating the essence in a clear way.
Now we know what to consider when contemplating a startup, when hiring and when writing a plan. And you’ve had all of this and more in mind when structuring your startup plan. Now is the time to raise money to fuel your business aspirations. Now you are ready to approach the venture capitalist.
The first thing to keep in mind when approaching a VC is to be aware of time. What that means is that you have to make a good impression in the first few minutes. Enter the legendary and apocryphal “elevator speech”. What this means is that in the time it takes for the VC in the elevator to get to your office (which floor would it be on ?!), he must have sold you his concept! Essentially, in about 2 minutes or less you are expected to clearly establish the rationale for your startup’s existence.
This can only happen if you have a clear understanding of the market and the opportunities. If you can’t explain what your company is about in a few short, concise sentences, you’ve lost the VC’s attention. This also means that you must be a great communicator.
But how do you get to a VC? As usual, there are good and bad ways. Bad form is an approach that shows that you are not prepared or that you have not adequately researched the CV.
For example, is your company in the VC area of expertise? Does venture capital invest in the stage where your company is? Does the VC have investments in a competitive area? Does venture capital typically invest the amount of money it is looking for? etcetera etcetera
As you’ve probably guessed by now, submitting a well-researched business plan as a follow-up to a recommendation is a good way. A VC receives so many plans that a referral is probably the best way to get noticed. A referral also implies that some type of quality control has been performed. So how do you get a referral? One way is to use the good offices of the Advisory Board or some other intermediary.
In cases where only cold contact needs to be made, the Executive Summary should be submitted first. This is a 2-3 page document that captures profiles of key team members, market need / opportunity, unique offering, business model, revenue projections, and some information on how much money is being sought and with. what purpose.
This should be a neat, professional, and well-written document. Make sure there are no spelling mistakes! If this is of interest, the VC will probably call you for a meeting. Be well prepared for the discussion. As the old saying goes, “you won’t get a second chance to make a first impression”!
