What are you trying to achieve when you meet with VCs?

You may think it’s to close in on a, let’s say, a $3million dollar investment for example and you should always keep the goal in mind but there are stages when building the relationship. You need to recognized them and make sure you are delivering at each step of what I call “The Stages of Captivation”.

Why do I call it that? Because that is exactly what you are trying to do – you are trying to captivate a VC at each stage of your interaction – from the first communication all the way through to term sheets and a deal. Why?

Because you are trying to establish and build a relationship with a VC – you are trying to attract them and encourage them to want to build something great with you – it is not about the cash, it is not short term and is not a loan – it’s a relationship so you can create something worthy of both their and your efforts.

So what is the First Stage of Captivation – The Hook

Before you even get through the door…you need to hook them.

How do you do that?

By making yourself look attractive.

Most often that first touch with a VC will be from your initial introductory email or executive summary.

Now be careful – with these two tools you are NOT trying to get your entire life story into as small a space as possible – you are trying to do just what I said before “You want to Hook them”. In other words, you are trying to entice them – to wet their appetites just enough that they want to meet you.

So, focus on the business opportunity and in particular, the size of the opportunity i.e. the upside if you manage to create a company which delivers on your expectations but a note of caution – try not to use to much hyperbole – keep the fact that you are about to change the world to yourself for the moment, instead cover the industry you are focused on, the business you want to build, why you are the right team to build it – If you cover those elements I would consider stopping there – with one added element –

If you are reaching out to a few VCs (and you should) – you should consider mentioning this point within your initial pitch – Why?

Because it’s human nature –

If you are attractive and popular with others then you’ll be more attractive and popular with these VCs.

And aside from the psychology of it – VCs want to find out about attractive opportunities before their VC competition – so consider briefly mentioning “We are meeting with a select group of VCs in Sand Hill Road” for example, suggests there may be interest from other VCs too – You have begun to create an ‘Impetus for Investment Action’.

…and because of it they will be more compelled to consider your opportunity and act themselves.

So – and let me make this point very clearly – one element of the hook is to suggest interest from their competition – Why? So you can create momentum.

What do I mean?

You want them to want you. And what will create that impulse?

A great initial hook, competition and a closing window of opportunity.

Throughout the process – at the start and all the way through – subtly mention that others are also interested in your opportunity. Capitalize on human nature – being confident and showing a certain demand is critical. A note of caution – there are not many bullets in this gun – do not try to suggest competition over and over again – use those few bullets selectively and wisely.

So – that covers the First Stage of Captivation – The Hook.

I’ll cover the second stage on the next podcast.

Until then – remember establishing a relationship with a VC is a two way relationship – Always keep in the back of your mind “what can they bring to the party aside from cash? Do you like these guys? Do you trust these Guys?”

So – Thank you for listening.

Please go along to AndrewIve.com to sign up for my mailing list and get update when other Podcasts and postings are available.

Here’s to YOUR Start-Up Success!

Andrew

Related posts:

1. Raise Millions For Your Company: What Are VCs? (Prelude)

When we launched Advisor Garage, we charged members a grand total of zero dollars – that’s Nada, Zip, Zilch, bumpkiss AKA Nothing! And during its four years of life, we went on to charge people zero on a daily basis. During that time, we continued to spend money on the business – servers, programmers, adsense and so on. We were so ‘Not-For-Profit’ we should have received a medal!

That doesn’t sound too smart does it?

…Perhap you’re asking yourself – “So why did you launch it Andrew?”

Good question – well, here are a few reasons I would tell my Start-Up Therapist if I could still afford one…

REASON #1)

We are entrepreneurs too and had been through the challenges and sometimes pain of starting businesses. We realized that not only was it TOUGH but what makes it even tougher is pulling the PIECES together.  The cash, the first few employees, the people to help develop the product or service, the new channels to market, the sales expertise, the legals and accounting stuff, finding the office – ALL of it.  You can only do it all yourself, while sitting in a Starbucks all day trying to make a venti last, for so long – after that, you need to find others to make your business idea real and Advisor Garage was about bringing people together to help make that happen.

REASON #2) 

I had this idea and I couldn’t shake it…I just HAD to bring it to the world. Being an entrepreneur is sometimes like that – you do it because if you don’t, the idea will continue to nag at you like a little yappy dog until you take it seriously and pat its head for a while. With Startups the ‘while’ often turns into ‘years’. Call it a disease but that’s how it happens. Well, it does for me anyhow. Boy do I need that Start-Up therapist!

REASON #3)

And here’s the kicker – we thought by launching Advisor Garage, we would maybe, perhaps, if we were lucky, with the wind in the right direction…stumble onto a few more great ideas to add value for other entrepreneurs. And, as luck would have it, WE DID!

So…we are transitioning into the next stage of Advisor Garage’s existence, and even as I type – the strands of Advisor garage Mark II are being pulled together…but just to make sure we are going to hit the right target - I have some questions for you, our (hopefully), soon-to-be customers…

1. What is the biggest frustration you face as an entrepreneur?

2. What result or outcome do you want to achieve?

 

3. if you could have anything happen as an entrepreneur, what would it be?

 

4. What information do you need right now that you can’t find answers to?

 

5. Do you need help securing angel or venture capital investors? If so what kind of help do you need specifically?

 

You would be doing us a favor if you could cut and paste these questions into an email and sending your answers to:

 

andrew (@) advisorgarage (dot) com

 

If you haven’t already – join our mailing list and we’ll let you know when the NEW and IMPROVED Advisor Garage is launched and also how it can Help You Successfully Launch Your Start-Up.

 

Until next time.

Related posts:

1. Cash – The Oxygen of the Start-Up (…or the Advisor Garage Re-Launch)