VC Tips

May 20, 2007 – 1:52 pm by RM Crill

For those of us who work regularly with the venture community, we take certain rules or behaviors for granted. I’m occasionally blindsided by an entrepreneur’s (completely reasonable) questions or false assumptions about how to handle venture meetings. It’s been said, and rightfully so, that I’m a fan of venture capital. You won’t see many derogatory comments below but know that there are certainly others who will augment my advice with more cautionary lists. The below set of rules includes the obvious and the more-obvious. My contemporaries would agree with most and I’ve tried to note where I’m likely stepping out of the conventional view.

  • Let’s start with a controversial one. Don’t take a meeting until you’re (almost) far enough along for them to offer a term sheet. For the most part, VCs love to take meetings. And why not? They’ve got a squad of young, smart MBAs armed with limited industry knowledge. These initial meetings help to educate the associates. If you are successful in developing your business, every VC would be happy to have built a relationship. So, in general, they want to see you and hear your story.
  • Sure, there are stories of VCs who built a long-term relationship with someone and watched as the company communicated milestones then knocked them down. Hearing about the day that a six-month relationship turned into a term sheet makes me think of the covers of romance novels I see at the grocery store checkout line. But these are small minority.
  • What risk do you take for going in too early? Well, you may only get one chance. If you’re dismissed as someone with an idea that doesn’t resonate with the audience, you’re likely done. If you blow the presentation, second chances can be hard to get. Sure, companies do get passed up and then re-emerge, but why take that risk? You can just make a good first impression when you’ve (almost) got your story ready.
  • “They didn’t say no.” Well, yes they probably did. There’s little motivation for a VC to decline a relationship. Who knows? You might turn it around. You’re surely going to talk to others and no venture firm wants a reputation for saying no. The absence of a follow-up request is a no. Sorry about that.
  • Dress code. There’s not much to this but here’s a few points. First, if there’s several of you, talk among yourselves and look like you came from the same office. I had a meeting where my CEO wore a suit and tie and the CTO had jeans and flip-flops (no, seriously, flip-flops). Second, relax (subject to the flip-flop comment preceding). Most venture partners and associates are business casual (I was surprised to see this even on a recent trip to Manhattan). And if you’re an artsy-smartsy guy, you’re expected to look like it. The founder of Seadragon, a Princeton PhD and one of the smartest guys on the planet has never worn anything but a black t-shirt (I’ve asked to see the baby pictures). Hey, when you’re that cool and you’ve got a thing, go with it. Just make sure you’re CFO doesn’t show up in a suit (of course I didn’t).
  • Sit on one side of the table. If there’s more than one of you, sit on the same side of the conference table, facing the door. You’ll be able to see the partner when she enters and, by sitting on the same side, you can keep eye contact with the people who matter (not the ones who joined you in the rental car).
  • Arrive early. Something’s going to go wrong. Your two-monitor set-up will flummox the big display, the wireless password won’t work, the last guy took the Ethernet cable. Get there in time to figure it out.
  • Have a back up. It’s easy to put your pitch on a second laptop or a memory stick. Cheap insurance. And bring a few sets of your slide handouts in case the projector fails or if the VC just prefers an informal chat.
  • Not that they want them, but remember your business cards and if you don’t have them yet, spend the $40 on line.
  • Assume the meeting will take an hour and, if you’re making the rounds that day, leave plenty of travel time. It’s better to take another day than to risk showing up late. The presentation should be no more than 20 minutes to allow for the Q&A within the allotted hour and to keep their attention.
  • Pay attention to who’s in the room. The General Partners or Managing Directors matter more than the Vice Presidents or associates. It’s a good sign if, during the meeting, someone suggests an addition to the meeting.
  • When confusion strikes, avoid ganging up on the listener. Whoever was talking when the listener became confused should resolve it. If you’re on the bench, avoid jumping in as it can do more harm than good.
  • The time to debrief is in the car. Resist all temptation to say anything about this meeting or the next meeting in the elevator, hallway, or, for the love of god, the bathroom.
  • Don’t go it alone. It’s usually best when two people make the pitch. Three is the max and only works when there’s clear distinctions among them. Rehearse who’s going to talk to what slides and, more importantly, who will answer what genre of questions.
  • You’ll find that certain phrases work for you. Don’t think you need to shuffle your language because you’ll sound scripted. When you’ve got a statement that works, resist the temptation to say it differently because you just said the exact same thing two hours earlier. Nobody’s comparing notes.
  • And don’t ask them to validate your parking; you’ll look like a dork.

Disclaimer
I’m offering advice with the hope that it’s useful. In order to make it more so, I’ve over-simplified and generalized. Sure, there are exceptions to most of the statements I make but please don’t think you’re going to be a hero by pointing them out. We know them. I’m focusing on the middle 80% of the bell curve and offer conservative advice that most people can follow and win. Yes, I’m aware of Skype and Facebook, really I am. But I’m not willing to assume that your project is going to put you on the cover of the Business 2.0, let alone Forbes.

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