In our essay on how VCs decide to take a first meeting, we wrote that “a typical VC might get introduced to 1,000 companies per year, meet with 200, and invest in 4.”
But 2020 is not a typical year. It has ushered in a new remote era for the startup ecosystem, changing the nature of fundraising meetings and decision-making. VCs are now evaluating companies without ever meeting in person, and Founders are adapting how they get connected to investors — and pitch them — as a result.
To help Founders better understand this new world, we asked top VCs what successful tactics they’ve seen Founders use, as well as how they’ve altered their own investment processes.
At NFX we have long believed that Founders deserve a better fundraising experience — one that is tech-enabled. That moment has arrived.
Now, the Founders who excel in networking, pitching, & fundraising online will have the strong advantage.
The way to get meetings hasn’t changed — the best still manage to get warm intros. It does seem, though, that with more time at home and more research time, the quality of the cold emails I am getting has improved. They are more researched and personalized, which is good.
A new tactic I’ve seen is to request very short meetings. I now often get requests like ‘give me 15 min to demo the product and I am sure you would love it’. Before, that would have sounded like a strange request in a physical meeting world (why would the Founder settle for 15 min if they are making their way to find me?). But it’s a valid suggestion today. And, as it’s a smaller request, I say yes to more such requests than I did before.
Pitches essentially remain the same, but this new presentation arena has forced them to be more effective and more concise. The video medium gives more control to Founders and allows them to better control their pitch — which I think is a plus.
On the flip side, they can’t demonstrate their energy, jump to the whiteboard, or read my body language — all these are bad both for me as an investor and for them as they “normalize” everyone to a similar energy level and body language.
Top Founders are coming ready with many more backup slides (as it’s tough to draw on the whiteboard), are demonstrating their energy on the pace of speech, and are moving between different presentation modes.
Many Founders are also becoming more aware of the importance of their video and audio quality and are investing in tools to make sure it’s high quality. This makes a big difference.
Running through a full deck is not easy on video, so more smart founders are sending the deck ahead of time and asking what I would like to discuss in the call. That’s very helpful too.
Last thing: in many first meetings it used to be just the CEO. Now with the low burden of the video (not having to travel to the investor’s office), many teams are showing up 2 or 3 Founders to the call and are much better coordinated on who is presenting what. When executed well, it’s a great improvement to a solo meeting.
As I am not able to read as many tells from the people I meet remotely vs. in person (such as how they walk in, how they say hello to the other people in the office, do they take their glass at the end of the meeting, etc.), I use a few methods to try and fill in the gaps:
Gigi’s lessons from Brieflink, the tool to pitch your company to top VCs
It’s clear that social norms have changed as a result of Covid-19. Given how few investors are actually meeting people in public, it can be daunting to figure out how to get access and how to build a relationship over time with a VC when you know you’re not going to just bump into them at an industry event or conference.
The first thing I’d like to point out is that many investors ironically have more time available for meeting Founders because they aren’t spending time commuting, flying on airplanes, or attending conferences. At the same time, while VCs have more capacity to meet, they are also pretty ‘Zoomed out’, so it may be harder to get a VC to want to commit to yet another video call. So here’s my quick advice on how to get access, how to get a ‘yes’ for a meeting, and how to make an impact.
Getting access: Investors are inundated with meeting requests and have to make decisions about whom to meet and who unfortunately will not get a meeting. If an investor has to spend too much time thinking about whether to meet you or not, the chances of getting a meeting are greatly reduced. That’s why introductions are so critical. If a founder whom I already respect suggests I meet with you, the chances of my saying ‘yes’ are much higher because I’m taking advice from somebody I already trust. It isn’t that hard to network with early-stage founders, so my advice is to spend your time getting to know founders who have raised Seed & A rounds from VCs and over time earn the right to get introductions.
Getting a yes: If a VC assumed he or she would need to allocate a full hour to meeting you, the chance she says yes is greatly reduced. So make sure that you ask for an ‘introductory meeting’ in which you promise for the first call to be short, sharp and to the point. Offer a 30-minute meeting but don’t schedule anything for 45 minutes behind that in case he/she wants to run over. Have a game plan for how you want to use all 30 minutes in a high-energy, thought-provoking discussion.
Making an impact: I already gave it away — make an impact! Make it very clear early in the discussion what you do and why it matters. Practice your pitch so that it’s high energy and has a narrative. Have your points be staccato so that an investor can jump in to ask questions, or make a point themselves. In the meeting, inform the investor of your planned time frame for fundraising and your planned process. Close the meeting by asking whether your company fits the criteria of what the investor is looking for and how this pitch resonated or not with the VC.
What you’re doing is forcing the investor to think about how they viewed you and by verbalizing it out loud they also begin to think about that themselves. If it’s not a good fit, better that you know now. If they think it’s a good fit, then ask for a next step. My preferred ask would be, ‘Do you mind if I email you a short update with how we’re doing in 4-6 weeks from now?’ This is your hook to stay in touch and to earn the right for a second meeting.
As an investor, you would imagine it would be harder to make investment decisions without meeting teams in person. In some sense, this is true because we don’t have the ability to “kick the tires” of the office and staff and get a sense of the team and culture. But for Seed and A-round investors like Upfront Ventures, in many ways, I find the current environment easier to evaluate investments.
As a starting point, it is much easier for both parties to agree to have 5+ meetings in rapid succession to iterate around various topics of discussion because each meeting doesn’t require a commute or a commitment to a full hour. These fairly intimate conversations (on a Zoom, looking into each other’s house) actually help with rapport building, which is critical to evaluating — in both directions — whether or not we want to work together.
The hardest thing for me to evaluate is the interplay between founders. In a group setting, I often ask questions and then watch how the founders interact with each other. So much about the success of an early-stage business is the founder-to-founder dynamics, so this is critical. But having less insight here is accommodated for when I’m able to get to spend more time getting to know each founder individually.
In general, I find the remote relationship building much easier than I had expected.
While so many things in life have changed during shelter-in-place, I’ve found that it has given renewed focus to what matters — both personally and professionally. For founders approaching venture firms for financing, this is a great opportunity to make sure that there is a fit between the investors’ interests and risk profile with what a founder is trying to accomplish. The better a founder has thought through this fit, the more likely they are to stand out. I have moved to a model where often I will first ask a series of questions first.
These next few questions are more about your core business and tells me the narrative of who you are and — very importantly — why venture capital is the right financing mechanism for your business. It also tells me a little bit about why seed stage investors will be rewarded for the risk they take in investing in your business.
It is actually quite rare to get exceptional and thoughtful answers on these questions. I feel that this perspective is probably more timeless than just focused in a time period where we are all on Zoom. That said, the reason I bring these points up now is that I think focus is becoming more important. Rather than casting the net wide, you want to make sure that there is a great fit, right up front. We should all be going for the no as quickly as possible so that we can get to that heck yeah when it matters.
We have been investing in Founders on Zoom and the phone since the beginning of Precursor, so this isn’t particularly new for us. Ironically, our standard meeting is a 30-minute Zoom meeting for first introductions, which is the same as it was prior to SIP.
I do think that pitches, where people have a good setup (good lighting, a good microphone, and audio and a strong Internet connection), goes a long way. I like a simple deck with a clear story presented by the Founders.
I think Founders have really adjusted to the new normal. In general, I think people have standardized on Zoom plus the deck, and I think that new normal makes it easy to be consistent across meetings.
The one thing that does feel different is that we have been able to compress the time spent in between meetings, in some cases, because nobody needs to travel to have follow-up meetings.
Maybe we are unique on this front, but we have never prioritized being in the room with Founders as part of our investment process. In a way, this has been a relief to be in a world where lots of other people are coming to terms with this and the need to get comfortable making decisions where they don’t have the in-person interaction as a crutch.
Homebrew has always welcomed pitches from outside of our local Silicon Valley market and has taken plenty of cold inbound emails (vs. only meeting with founders who can find a warm intro), so to be honest, the Zoom era hasn’t really changed the initial tactics used by entrepreneurs to connect with us. Additionally, we know that the last few months have thrown teams into working environments that can be random and chaotic, so a founder should never apologize if a child or pet leaps into the frame during a pitch.
My advice to founders would be to not hide behind the presentation of a deck, but rather to send materials in advance, encourage the VCs to read them (we do!), and then use the live meeting as a hybrid pitch/discussion/demo. Deftness moving back and forth between pitch deck, conversation, and a product demo takes a bit of practice. Also, if you’re going deep on a particular topic and need to convince someone of your position or explain a complex topic, you should get out of screen share slide mode, and get back to seeing faces.
Two immediate changes come to mind when considering how we’ve shifted our investment decision-making process.
So as best we can, we’ll try to get the Founders together for a virtual conversation (vs. straight-up pitch) and even sometimes do a happy hour (or morning coffee) together over Zoom as just a ‘let’s put away the deck and see if we actually enjoy being together.’ Social distanced walks can help too but we don’t want to assume everyone is comfortable with that (or isn’t also watching their kids, etc) so it’ll never be something we require.
To successfully fundraise in the remote era, if anything, it feels like founders are approaching the fundraising process with more intentionality. They are better at thinking through how to sequence the process. How to make sure they have the right introductions. Having a deck prepared.
To me, the biggest change has been an even greater reliance on backchannel references. This is because I find it difficult to really get to know someone over Zoom. Staring at each other on a computer screen creates a formality and distance versus what you’d be able to get in the more open-ended setting of a coffee or meal together.
I miss being able to do that. I just closed a new investment in a company, and I seriously can’t wait to meet the founders in person for the first time.
Pre-COVID, we already routinely met with companies via Zoom, so it hasn’t been as large a change as it might seem. I think two things are even more important in a Zoom-only era.
First, you really need to read the room. In person, it’s easy to tell if you’re losing someone via their body language. If you are just talking at a set of slides on your computer, it’s much harder. Make the slides smaller and make everyone’s faces bigger.
My other piece of advice would be to start the conversation early. Our aim is to deeply partner with a few companies each year and it’s hard to build the relationship — on both sides — if you are trying to do it in a single week. Often founders get the advice to try to create urgency / FOMO and push through a financing as quickly as possible.
We can do all of the intellectual diligence quite quickly, but we think it takes time to really get to know someone and that’s doubly hard in the age of COVID. We are much more likely to lean in if we’ve had time to get to know the founder and understand the business.
We rely a lot more on references to understand what it’s like working with the team. We’ve always valued references — we can easily do 30+ references on a single company before we decide to partner — but I think they’ve become even more critical in the era of COVID.
We also encourage founders to do the same. The kinds of partnerships that we strive for often last 10-20 years. It’s important for both sides to get to know each other early and do their homework.
At NFX we build software for Founders that makes fundraising faster and more transparent. These are the tools we wish existed when we were Founders. They’ve now been used by thousands of Founders and VCs to successfully get connected, get informed, and get funding.
As Founders ourselves, we respect your time. That’s why we built BriefLink, a new software tool that minimizes the upfront time of getting the VC meeting. Simply tell us about your company in 9 easy questions, and you’ll hear from us if it’s a fit.