Loading...
Answers
MenuHow to conduct a second phone interview with a VC?
We have been approached by a VC about two months ago and did our first intro call (upon their request). A week ago, they emailed me again and requested a follow-up call. Within the past two months, the traction may not have been impressive, but we do have a powerful product, an amazing and growing market, a proven market-product fit, with a great go-to-market strategy. We need funding to make all this happen in a timely manner. How do we conduct this call to have a better chance of approval?
Answers
First, make sure that as part of a follow-up call, a General Partner is participating. Without a GP participating, the opportunity is actually not advancing in a meaningful way.
Second, highlight what's new since last you spoke. It's likely that they identified some potential promise in what you're doing and want to check-in. The best way to build credibility is to show that the things you said you were going to do, you've done, and that momentum is building.
Third, answer their questions concisely and to the point, and no more than the answer to the question.
That's all the generalizable advice I can offer without knowing more of the specifics of your situation and what kind of investor you're dealing with. Happy to talk to you in a confidential call.
Here is where your poker skills come in because you need to create demand for your deal. Investors chase rabbits, so you have to figure a way to show that your company is the rabbit other investors are looking for.
If you are on Angel list a simple review, comment, or referal rom other investors could raise the level of interest and help you close. Not all investors are lead investors some just want to participate, if you have met with someone who commits have them post it, other investors will see it.
I'm not very fond of press releases but if there is something that changes perspective or adds to the "deal" heat is a press release. Use the PR as leverage saying -Hey we were just menitoned on "x" publication.
When a VC asks, when do you expect to close? Give them a short time frame 2 to 3 weeks because you want to get back to running and building your company.
Finally ask them openly what do they need to know in order to get the deal closed (KPI's, balance sheet, MVP's, etc)
Happy to talk more strategy :)
First, don't be nervous. VC's are obviously looking for numbers. While base line numbers are important, there are obviously other factors. You have to explain what was accomplished in the month. IE building a product, getting X done with the process, or how what you did will get you to the next stage, is important. If you tried something and it didn't work, thats okay too. However you need to explain how your mistakes won't happen again and give a detailed explanation on how you've fixed those mistakes. Throughout the entire process don't answer too much. What I mean is, make sure you focus on the good and answer their questions but don't go too far off topic on what they are asking you about.
If at anytime they say they need to move on, its okay. But don't let go. Ask them if you can still keep them updated and if at a further point when you have more traction, if you can ask for another meeting. Good luck!
Related Questions
-
What legal precautions can I take to make sure nobody steals my startup idea?
I've discussed ideas with hundreds of startups, I've been involved in about a dozen startups, my business is at $1M+ revenue. The bad news is, there is no good way to protect ideas. The good news is, in the vast majority of cases you don't really need to. If you're talking to people about your idea, you could ask them to sign an NDA ("Non Disclosure Agreement"), but NDAs are notoriously hard to enforce, and a lot of experienced startup people wouldn't sign them. For example, if you asked me to sign an NDA before we discussed your Idea, I'd tell you "thanks, but no thanks". This is probably the right place though to give the FriendDA an honorable mention: http://friendda.org/. Generally, I'd like to encourage you to share your Ideas freely. Even though telling people an idea is not completely without risk, generally the rewards from open discussions greatly outweigh the risks. Most startups fail because they build something nobody wants. Talking to people early, especially people who are the intended users/customers for your idea can be a great way to protect yourself from that risk, which is considerably higher than the risk of someone taking off with your idea. Another general note, is that while ideas matter, I would generally advise you to get into startup for which you can generate a lot of value beyond the idea. One indicator for a good match between a founder and a startup is the answer to the question: "why is that founder uniquely positioned to execute the idea well". The best way to protect yourself from competition is to build a product that other people would have a hard time building, even if they had 'the idea'. These are usually startups which contain lots of hard challenges on the way from the idea to the business, and if you can convincingly explain why you can probably solve those challenges while others would have a hard time, you're on the right path. If you have any further questions, I'd be happy to set up a call. Good luck.DK
-
Business partner I want to bring on will invest more money than me, but will be less involved in operations, how do I split the company?
Cash money should be treated separately than sweat equity. There are practical reasons for this namely that sweat equity should always be granted in conjunction with a vesting agreement (standard in tech is 4 year but in other sectors, 3 is often the standard) but that cash money should not be subjected to vesting. Typically, if you're at the idea stage, the valuation of the actual cash going in (again for software) is anywhere between $300,000 and $1m (pre-money). If you're operating in any other type of industry, valuations would be much lower at the earliest stage. The best way to calculate sweat equity (in my experience) is to use this calculator as a guide: http://foundrs.com/. If you message me privately (via Clarity) with some more info on what the business is, I can tell you whether I would be helpful to you in a call.TW
-
When raising money how much of equity do you give up to keep control? Is it more important to control the board or majority of shares?
It entirely depends on the kind of business you have. If you have a tech startup for example, there are pretty reliable assumptions about each round of funding. And a business plan and financial forecasts are almost totally irrelevant to sophisticated tech investors in the early stages of a company's life. Recent financial history is important if the company is already generating revenue and in that case, a twelve-month projection is also meaningful, but pre-revenue, financial forecasts in tech startups mean nothing. You shouldn't give up more than 10-15% for your first $100,000 and from that point forward, you should budget between 10-20% dilution per each round of subsequent dilution. In a tech startup, you should be more nervous about dilution than control. The reality of it is that until at least a meaningful amount of traction is reached, no one is likely to care about taking control of the venture. If the founding team screws-up, it's likely that there will be very little energy from anyone else in trying to take-over and fix those problems. Kevin is correct in that the board is elected by shareholders but, a board exerts a lot of influence on a company as time goes-on. So board seats shouldn't be given lightly. A single bad or ineffective board member can wreak havoc on a company, especially in the early stages of a company's life. In companies outside of tech, you're likely going to be dealing with valuations that are far lower, thus likely to be impacted with greater dilution and also potentially far more restrictive and onerous investment terms. If your company is a tech company, I'm happy to talk to you about the financing process. I am a startup entrepreneur who has recently raised angel and VC capital and was also formerly a VC as part of a $500,000,000 investment fund investing in every stage of tech and education companies.TW
-
How much equity should I give an engineer who I'm asking to join my company as a co-founder? (He'll be receiving a salary, too, and I'm self-funding)
You will find a lot of different views on equity split. I haven't found a silver bullet. My preference/experience is for: 1. Unequal shares because one person needs to be the ultimate decision maker (even if it's 1% difference). I have found that I have never had to use that card because we are always rational about this (and I think us being rational is driven because we don't want a person to always pull that card cause it's a shitty card to pull) 2. When it comes to how much equity, I like Paul Graham's approach best: if I started the business by myself, I would own 100% of the equity; if xxx joined me, he/she would increase my chances of success by 40% (40% is just an example) at this moment in time. Therefore, I should give him/her 40% of the company (http://paulgraham.com/equity.html) 3. In terms of range, it could go between (15-49%) depending on the level of skill. But anything less than 15%, I would personally not feel like a cofounder 4. Regarding salary and the fact that you will pay him/her, that's tricky but a simple way to think about it: If an outside investor were to invest the equivalent of a salary at this exact moment into the startup, what % of the company would they get? (this may lowball it if you think the valuation is high but then again if you think you could get a high valuation for a company with no MVP, then you should go raise money) One extra thing for you to noodle on: given you are not technical, I would make sure a friend you trust (and who's technical) help you evaluate the skill of your (potential) cofounder. It will help stay calibrated given you really like this person.MR
-
How much equity is typically taken by investors in a seed round?
From my experience I would not advise you to go with Venture Capital when you're a start-up as in the end they will most likely end up screwing you. A much better source for funding would be angel investors or friends/family. The question of how much equity should I give away differs for every start-up. I remember with my first company I gave away 30% because I wanted to get it off the ground. This was the best decision I ever made. Don't over valuate your company as having 70% of something is big is a whole lot better than having 100% of something small. You have to decide your companies value based on Assets/I.P(Intellectual Property)/Projections. I assume you have some follow up questions and I would love to help you so if you need any help feel free to call me. Kind Regards, GiulianoGS
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.