August 7, 2014
The all important issue of funding. When it comes to starting up, having a solid business plan, product, and strategy are important, but, let's be honest here, none of it can become a reality without some green stuff (that would be money…in this particular case). So unless you've been blessed with a killer trust fund, you'll probably be seeking some outside help. This is where VCs and angel investors enter the picture.
On Tuesday night, Tech Cocktail and Disruption Corporation hosted a panel of some of DC's biggest startup investors. They answered questions and offered up a ton of insightful advice to a packed house.
So what's the best way to stand out to investors who see thousands of pitches a year? And, conversely, what's the quickest way to get sent packing? Here's a short list of several DO's and a DON'T to consider when meeting with the people who will hopefully fund your dreams.
DO get an introduction – Dan Mindus, Founder of NextGen Angels admitted that he tends to prioritize based on the strength of the introduction. If you can't find someone to introduce you to an investor, then you need to network better.
DO your research before pitching – “Know your audience.” says Penny Lee of K Street Capital. Go after investors that specialize in the type of business you're starting up. Don't waste your time pitching to those who have no interest in what you're doing.
DO make it personal – John Backus, Co-founder and Managing Partner at New Atlantic Ventures warns “never send an email to ‘Dear Investor.'” He advises making a targeted pitch based on your potential investor's personal interest. This goes hand in hand with #2. Research both the firm and the individuals to whom you will be pitching. Everyone has an internet presence these days, even moreso if they work in venture capital. Google exists for a reason. Use it.
DO know the basics of venture economy – Paul Singh, founder of Disruption Corporation and General Partner at Crystal Tech Fund suggests Venture Hacks as a good resource for learning the basics. Don't go into a meeting asking for an astronomical amount of money and giving overblown projections. This shows that you really have no idea what investors do or how to value your company.
DON'T ask for money unless you're committed – While it's fine to keep your day job and bootstrap your idea for a while, if you want to grab the attention of investors, you have to be able to take the risk and jump in full-time.
So what if you followed all of these rules, think you made the perfect pitch, gave all the right answers, and still didn't get an offer? Then perhaps it's time to look within and think about why you didn't get it. Do investors sometimes get it wrong? Sure. According to Don Rainey of Grotech Ventures, “It's a frog kissing business.” But, it's also likely that there's things you need to change before you try again. “Don't blame the VCs,” says Singh.
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