Do you think you have the greatest startup idea, an awesome team and a first prototype or market traction, for instance through an MVP? Well done! Now it’s time to raise some money to grow and scale your business. However, unfortunately it turns out that you don’t know anyone who is working for a venture capitalist. Bad luck, sure — but it’s not the end of the world or the end of your startup. In this post, we would like to share some strategies on how to approach VCs and how to raise the funding you need for growth.
Go out and meet us
Always keep in mind that VCs are also especially keen on meeting you: We are constantly monitoring trends and startups and are dedicated to catching, funding and building the next unicorn before anyone else does. So, remember: It’s not just about you wanting to get in contact with VCs, it’s also about VCs desiring to find you — if you have the next multi-million-dollar business.
Therefore, VCs like us love startup events and conferences. If you consider those a waste of time and would rather work on your product during the time of the event, you need to change your attitude (or choose a better event — there are bad events, too). Getting out of your office and talking about your business gives you the chance to reflect on your idea and to find inspiration for growth from other creative minds. Besides opening your mind, events give you the chance to recruit great employees and to get in contact with investors. If you stumble upon a VC, do the following: take the chance to describe your business briefly, share a few relevant KPIs (e.g. number of customers, market size, conversion rates), show your website, app or prototype and get his/her contact data. When you follow up, include your pitch deck and a reference to the talk you had at the event or conference.
Obtaining the chance to pitch your business to a VC is certainly easier when you attend a dedicated pitch event. Often, VCs or Business Angels are part of the jury or the audience and the whole event is centered around the process of pitching and discovering new businesses. Here, the pitch is a bit more formal — depending on the event, of course: you will typically get a chance to speak on stage in front of a large audience and might for instance be able to show a few slides. Always be prepared for questions too — from the audience and from the jury! When designing the slides, please put some work into it: if we can see just the information we need directly presented in a nicely designed way, we are certainly more likely to become fans of you and your business. For a detailed look at how to design a good pitch deck. Keep in mind that you might not be willing to give a too detailed look at your KPIs when you are speaking to a larger audience — which is of course different than talking to a VC one-on-one. Oh, and while we’re on the topic of confidentiality…
A few simple words about NDAs
In short, we don’t like them. Please focus your attention on building a great product, on delighting your customers and on convincing VCs that your business is the best business ever rather than on protecting yourself against anyone who is willing to take a necessarily detailed look at your financials. If we want to invest, we want to know everything and we won’t invest if we have the feeling that we would be buying a pig in a poke. Plus, we are professionals and we won’t share your data with your competitors. Ever. Even without an NDA.
Use your existing contacts and find intermediaries
One way to do this is by searching for our personal profiles on LinkedIn or Xing. We might have a shared connection. Get in contact with him/her and ask for an introduction to us. Getting an intro from someone we know and like is always better than a cold email as it emphasizes the effort you put into your investor search and makes you look more trustworthy.
If you don’t tend to use these networks that much, finding an intermediary can become more difficult. Ask your peers or ask at startup events about where to get funding for your idea. Maybe they know someone who knows someone etc. — you see, it’s all about networking.
Another excellent idea is to approach your existing investors, if you already have some. They might be co-investing into other startups together with VCs or may be personally connected to them and might be willing to introduce you.
Your last choice: website forms or e-mails
Cold e-mailing should always be your last choice: networking works. So please go out and network first. If all else fails, you can always come back and contact VCs via a form on their website or through e-mail as a last resort.
The first thing to do after you have decided to approach VCs via cold email is to find VCs that suit to your area of business. For example, we focus on software as a service, marketplace & e-commerce, and digital infrastructure such as marketing technology. We committed ourselves to these investment themes in front of our own investors. If you build drones, for example, you could be the greatest drone startup ever (and we love drones!), but we still won’t be investing in you.
When you have found a VC who matches your field of business, e-mail him/her. The most important thing in that email is: please include your pitch deck. This is what tells us about your business, your market and your team. No business plans that are written like scientific papers, no “Hey, I have a great idea, can I talk to you. Best, X”. Again, for guidelines on how to design a great pitch deck, please see the afore-mentioned blog post of ours. After writing, wait for a reply. You might want to follow up after about two weeks if you haven’t heard back.
So, what should you do?
The first thing to do is to network and make use of your existing connections. Personal introductions are incredibly helpful. They mean that your pitch is coming from a trustworthy source and it shows that you have put effort in your investor search. Additionally, if you go out and talk about your idea, you will get valuable feedback that will help you in developing your business.
Always remember: Just as you are looking for investors, we as VCs are looking for the next big thing — which might be you! We’d love to find you and you’d love to be found.
We wish you tremendous success with your fundraising and hope to hear from you soon!