Does it matter how I contact a venture capitalist? Yes, it does! It matters a lot. Venture capitalists (VCs) such as Volta Ventures, Peak Capital, Henq, Newion and a dozen others, typically receive numerous pitch decks every week and must make choices on which they spend their time. As a startup, you can direct this process by selecting the right communication channel and content. This optimizes your chance of landing your investment with the venture capitalist best suited for you.
This article was written by Frank Appeldoorn from Volta Ventures (investors in Sentiance, Magnetic, Axoniq, EcoChain and Bitsensor).
Basically, deal sourcing or origination for venture capitalists comes from three sources: direct communication, their network and proactive search.
Whether online or offline (yes, we still get letters from tech startups) direct communication involves sending your investment deck to a VC without prior contact. The VC has two information points to judge the investment on: your email and your deck. Both must be well prepared to increase your chances on a meeting. Did I already mention that you are competing with a lot of startups and most of them prepare their decks adequately? First, your email should be concise, clear and personalized, expressing the need for a follow-on meeting and why the VC you are writing to brings you most value. Be sure to look up the VC’s portfolio (like many investors, our portfolio is on our website) and indicate why you are a good fit.
Second, your deck should be about quality and not quantity. Don’t make vague expressions like “our technology will revolutionize”. Be explicit: “our technology delivers XYZ to customer ABC. Therefore reducing cost with X%”. If you don’t make a stellar investment deck, your chances of getting a follow-up meeting are slim.
World-class VCs have world-class networks and use their network to the advantage and the growth of their portfolio companies. We thrive because of our network. So if you get your deck sent by a person close to us, this will attract our attention and increases your chances of getting to speak to us physically.
Although less impactful than having a connection to someone we value, meeting us at startup activities is also a good approach. In these informal setting you can bounce ideas off of us and we get to know you and your team a bit more. And if you’re pitch is appealing, we’ll ask for a follow-up meeting. This year for instance our team was present at TNW and at the Amsterdam Capital Week. In this week we organized a cycling tour and many other smaller events at different accelerators and incubators.
Venture capitalists do proactive searches because some good companies with traction are not busy fundraising but rather (as it should be) focusing on their clients. So a venture capitalist will scour the market and go to events in order to speak to certain startups. For the startup that receives an invitation, it is a confirmation that they are on the right track. For the VCs it means that they contacted a company viable for investing. Although you could argue that the negotiation position of the VC is diminished…but that’s a different subject!
Prepare your search for funding by doing two things:
- Know what VCs invest in your space. You can do this by looking at the Peak Capital Tech Ecosystem sheet and look at the portfolio and criteria of the VCs. Prioritize your VC list based on (assumed) interest.
- With this list reach out to the VC by getting introduced through angels, clients and advisors or meet them at networking events. Talk to the lower prioritized first in order to practice your skills.
Good luck hunting!
About the author: Frank Appeldoorn is principle at venture capital firm Volta Ventures. Prior to joining Volta, Frank acted as an advisor to IT startups in their fund raising efforts. He was VP Finance at Endemol, responsible for a media production unit of $45m in sales and several joint ventures. At AkzoNobel Frank held the position of European Finance Manager for retail paints.
Image credit: congerdesign via pixabay