As we know all too well, most VCs you pitch will say ‘no’. So, when it comes to raising your round, you shouldn’t be jumping in a plane for every 1st meeting you get. 1st meetings mean nothing. There is no assurance that they will move ahead. Investors could be learning about the space, just seeing who’s out there or just be bored (not likely, but you never know…). So, how do you efficiently and effectively allocate your time and travel budget when you need to raise capital?
This isn’t an issue if you are in dense markets like the Valley. In one sleepy building in Palo Alto you can literally walk out of Felicis Venture‘s office go 3 feet across the hall and be in True Ventures‘ offices. If you’re not in the Valley, Boston, NYC or another market with investor density then you need to travel to raise your round.
The problem with this as I said is you need to qualify interest before hopping on a plane. Otherwise you will spend a lot of time and money with no assurances that you will be closer to getting a lead investor.
Being a frugal, Scottish and overly logical type, I recognized this early and when I was pitching for $ I would always start off with phone pitches. Now I managed to raise capital. But, now that I’m the one listening to pitches, I can tell you the experience sucks.
One day recently, we had two remote pitches. One was a 1st meeting with someone we did not know well. The other was with a team that I know and respect a lot. Both were horrible. This has nothing to do with the teams or their opportunities. Just the whole audio / visual experience.
We had issues on our side: fumbling to get our skype speaker to work, subsisting on crappy wifi. We just had trouble getting into it. I know, having met one of the pitchers in person after, that it was a crappy experience for them too. You can be pitching your heart out and you have no idea if the investor is engaged or is doing e-mail (BTW, I see investors do this often in phone-in board meetings. aka – “bored” meetings – but that’s another story…).
So what should you do? To start:
– Approach investors who focus on your sector and stage
– Get very warm, highly qualified intros to them
(You should be doing this anyway, for local or far away investors).
– Do an intro meet and greet call. Don’t do the full pitch, but in 20 minutes cover the following:
- Your background and accomplishments – to establish credibility and interest
- The elevator pitch – to clearly and quickly describe your opportunity
- Your status – to quickly qualify if you are too early for this particular investor
- Your round – again, to qualify fit with the investor
Leave 10 minutes for questions/ discussion which should hopefully set the stage for the investor to ask you to come in to do the full pitch.
Do that with a few funds / groups in a given city and you can confidently book your trip knowing that you have some well qualified meetings and increased chance that the investor will bite and start doing diligence.
Just them excited remotely, but always pitch in person!