Here’s What VCs Look For The First Time They Meet A Founder
For startup founders, the whole point of a first pitch meeting with venture capitalists is to secure a second one. But realistically, what are your chances of that happening? (Actually, by some reckonings, it’s lower than 10%.) Make no mistake: VCs make snap judgments and imperfect assessments of entrepreneurs who come seeking their investments all the time; many of the biases baked into the VC sector disproportionately shortchange women founders and founders of color in particular.
So while the odds are high that many if not most of your pitches will fall flat for reasons beyond your control, there are a few things you can do to strike up good rapport with a VC in that crucial first encounter. Here’s what several VCs say they look for most in those introductory meetings.
Confidence And Conviction
This should go without saying, but too often confidence shades into outright arrogance, or else entrepreneurs psych themselves out and come across as timid. Magdalena Yesil, founder of Broadway Angels, suggests one tip for avoiding both pitfalls. “Do not think of the people sitting around the table as powerful folks with a checkbook. That will make you nervous,” she says.
Instead, “think of venture capitalists as folks who want to know about the opportunity you are pursuing and why it will make them a lot of money–why you will make them a lot of money,” Yesil explains; it’s about the ideas you’re bringing to the table, not the cash they’re (hopefully) laying on it. “That shifts the power dynamic. In fact, you will be doing them a favor by ‘allowing’ them to invest,” she continues.
But it’s not about selling them on how great you are personally, Yesil adds. It’s about your story: “Own your story and believe in it yourself, and see if they are smart enough to come along on the ride.”
How You Answer, “Why You?”
Not all VCs look for the same things, though, and Stephanie Palmeri, a partner at Uncork Capital, approaches initial pitch meetings a bit differently. In her view, “Your personal story is paramount when raising money for the first time,” she says.
“When I back an early-stage company, I back the founder, first and foremost.” In this, she shares the belief of Tacklebox Accelerator founder Brian Scordato, who argued last year in Fast Company that “the startup idea you pursue should be one you’ve been unconsciously preparing for your whole life. It should be about your strengths, not just a gap you see in a market.” In fact, he continued, “The first thing you should ask yourself when you have an idea is, ‘Why am I the best person to start this?’”
Palmeri explains why investors like her want founders to be able to articulate that very same thing. “It’s going to be a long and likely bumpy journey as you build your company. I want to understand why you are uniquely positioned to defy the odds and build and large and lasting company in the absence of very limited proof points today,” she says. “Your personal story can be a powerful tool to communicate your experience, your motivation, your perseverance, and your passion.”
Authenticity And Candor
Lauren Loktev, partner at Collaborative Fund, likens showing up for a first meeting with a VC to going on a blind date. “In an ideal scenario, it’s the beginning of a decades-long relationship,” she says, and one of the best ways to cut through the stressful, potentially awkward vibe of that first meeting is to keep that long-term goal in mind.
“You want to feel like there’s an authentic connection with the investor and like there’s a real potential to build a strong partnership,” she explains. “That’s a two-way street, and it won’t happen with every person you meet, which is why the adage ‘just be yourself’ applies here.” Just as you wouldn’t pretend to be someone you’re not on a job interview, only to be found out later to possess a different skill set and personality once you’re actually on the job, the same principle applies here. “But, of course, be the best version of yourself,” Loktev adds.
Whether Or Not You Just “Came To Chat”
Jay Levy, partner at Zelkova, says coming by to “just have a chat” doesn’t work anymore; authenticity is great, but don’t overdo it on the informality as a result. “We want a demo, a deck, charts, graphs, pictures and/or words. Make this stuff as tangible as possible for us,” he urges. In fact, “We don’t want to have a conversation with you–yet,” Levy adds. “We want you to razzle-dazzle us with your pitch.”
In his experience, “This seems to be cyclical pattern: The pitches we saw in 2008–2011 were polished and strong, probably because they were getting so many ‘no’s. From 2012 to 2014, there were more ‘let’s just chat’ meetings.” But as the hype surrounding tech unicorns dampens, Levy has found that’s changing a bit. “These days, the pitches are getting better as capital becomes harder to find.”
If you’re a founder, maybe that isn’t a bad thing: Approach your first meeting with VCs as a chance to really wow them–and hopefully avoid having to pitch new investors over and over again.
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