Loading...
Answers
MenuHow should I approach a conversation with a Venture Capitalist who wants to know more about my company?
I've been approached by a partner at a large European VC (€150M Fund), he would like to have an intro chat. What should I do? Is this normal? What should my view be right now? They have recently invested in a company in the a similar vertical but not at all a competitor.
Answers
I would look to see what stage you're at as a start.
I've ben through this many times.
1. First study the VC and the partner
2. See what else he has invested in
3. They may be looking to round up their vertical with something similar or to acquire smaller players. If you're not a competitor, then anything is game.
4. Study when they invest and how
Lastly:
1. Set up the call.
2. Start the call by letting them talk a lot first. Ask: What is your mandate, sector? What do you invest in? What stage? What do you look for? What is the typical investment size? Where (geographically) do you invest?
This will tell you a lot about why they are reaching out and what you should say after.
Hit me up privately if you would like to discuss more, and good luck!!!
Make sure you research the partner and his company before agreeing to meet and decide before the meeting exactly what you want to disclose about your company and your products. Often these meetings are fishing expeditions to get market or competitive information as background for the firm's investment in another company.
I don't see what could be wrong with finding out what he wants. After all, just like a bank loaning "retail money", they have to find somewhere to invest their funds.
Do not assume this means any commitment whatsoever. It's just a chat.
Read 'Venture Deals 2nd Ed' by Feld to prepare - pound through it over a week if you're tight for time. A pdf is available online if you can't get the paper copy.
Over the years I was contacted several times by VCs. Before giving out any information, I would sort out who exactly you are talking to. Often the people who call are headhunters of sorts. They are "associates" who are trying to get info. on your business. They are happy to take as much information as you will give them quite frankly.
Either way, I would ask more questions than answer quite frankly. Why are they calling? What interest do they have in your company? What companies do they invest in? What is the minimum revenue a company must have for them to actually consider an investment and how firm is that number?
You may find that based on the answers to these questions, there is no point in you divulging any information about your company.
I found that early on, I felt somewhat romanticized by VCs calling only to find out the people calling me were low level "grunts" of sorts milking me for info. I was overeager to share info. about my company.
As time passed, however, I became much more careful about what I shared and I generally was the one vetting them more than they were vetting me.
Speak with him and divulge as much information as possible. This will force you to be more creative, exude confidence become an indispensable resource for future endeavors. If you are not willing to give away your ideas, your fears and insecurity will kill the growth of other new ideas.
Focus on your mission. Remember VCs = dilution*. Ultimately it's all about WHY you are building your business. As for myself, what I'd really want, is to be approached by a potential acquirer. Are you and your co-founders aligned as to why you are building the business? Do you have a proper exit strategy? I've gone through two successful exits (bootstrapped) that made my dreams come true. If you would like to know why you should have an exit strategy, happy to take your call. An exit strategy is the greatest value driver for a startup, a strategic exit is the greatest value creator for entrepreneurs. *http://RMentrepreneur.fyi.to/Dilution
Related Questions
-
What exit strategies do angel investors want/prefer for a service business?
Keep in mind that investors invest for returns. Telling a prospective investor that you want his or her money to grow your business but don't plan on ever generating a liquidation event that pays him or her a dividend is not likely going to work; angel or not. You may be better served with debt financing where returns are generated in the form of interest payments not equity value growth. BUT, if equity financing is the plan, you're going to want to develop a strategic exit plan right from the start. That means identifying prospective buyers, strategic channels etc and characterizing the value drivers for each right up front. You'll find prospective buyers come in a number of forms; competitors, bigger versions of you, strategic partners, private equity, etc. Each will value your business in different amounts for for different reasons. Understanding this is vitally important for you to navigate to securing the right money, from the right sources, with the most favorable terms. Once you've qualified and quantified each of them, then determine what (specifically) you're going to need to do to align your business with those prospective buyers generating the highest returns. This will drive your business model and go to market strategy and define your 'use of funds' decisions. This in turn result in a better, more valuable business whether you exit or not. Do it this way and you'll have no trouble raising money from multiple sources. You can learn more about the advantage of starting with a Strategic Exit plan here: http://www.zerolimitsventures.com/cadredc Good luck. SteveStephan LittleSL
-
How important is a co-founder when it comes to raising capital?
I'm a single founder who was raised angel and venture capital. If your business is compelling enough, you could raise angel funding. But there is little chance you can raise venture funding without a team in-place. It's a negative signal to institutional investors that you haven't been able to lock down a committed team. That said, depending on the nature of your product and traction, it sounds like you might be past the stage of recruiting a cofounder and more into hiring a great team of employees. The differentiation being less title and more the amount of equity. It sounds like you are selling a physical product so the question is whether you have built the capacity to scale. If not, the importance of having someone on your team who has done that at scale, even at the angel level of funding, could be helpful if not required. Happy to do a quick call and give you more contextual advice.Tom WilliamsTW
-
Does anyone know of a good SaaS financial projection template for excel/apple numbers?
Here is a link to a basic model - http://monetizepros.com/tools/template-library/subscription-revenue-model-spreadsheet/ Depending on the purpose of the model you could get much much more elaborate or simpler. This base model will help you to understand size of the prize. But if you want to develop an end to end profitability model (Revenue, Gross Margin, Selling & General Administrative Costs, Taxes) I would suggest working with financial analyst. You biggest drivers (inputs) on a SaaS model will be CAC (Customer Acquisition Cost, Average Selling Price / Monthly Plan Cost, Customer Churn(How many people cancel their plans month to month), & Cost to serve If you can nail down them with solid backup data on your assumption that will make thing a lot simpler. Let me know if you need any help. I spent 7 years at a Fortune 100 company as a Sr. Financial Analyst.Brandon DolsBD
-
What happens to a convertible note if the company fails?
Convertible notes are by no means "earned." They are often easier to raise for early-stage companies who don't want to or can't raise an equity round. Equity rounds almost always require a simultaneous close of either the whole round or a defined "first close" representing a significant share of the raised amount. Where there are many participants in the round comprised mostly of small seed funds and/or angel investors, shepherding everyone to a closing date can be very difficult. If a company raises money on a note and the company fails, the investors are creditors, getting money back prior to any shareholder and any creditor that doesn't have security or statutory preference. In almost every case, convertible note holders in these situations would be lucky to get pennies back on the dollar. It would be highly unusual of / unheard of for a convertible note to come with personal guarantees. Happy to talk to you about the particulars of your situation and explain more to you based on what you're wanting to know.Tom WilliamsTW
-
What roles should the CEO and CTO have in a VC meeting?
The more important first impressions to leave a VC with are: 1) That you both are credible and inspire confidence that you can execute the plan you're fundraising on. 2) That there is good chemistry and a great relationship between the two of you; 3) That you can adequately address the concerns/objections/questions the VC raises. The CEO is expected to do most of the talking because the CEO should be the best person in the company at articulating the vision and value of the product and company you're building. If your CTO is comfortable presenting part of the pitch, it would be ideal for the CTO to speak to the product slides. The most important thing is for the CTO not to be a "bump on the log" meaning that you don't want them sitting there for most of the presentation with nothing to say. If you feel that's the case, you really shouldn't bring your CTO. Most VC meetings will not get technical and under the hood. Each question answered should be answered by the person best qualified to speak to that question. You should make eye-contact with your partner and use subtle body language to find a way to cue the other person to speak to that question or simply offer "CTO, would you like to answer that?" Bottom line, make sure that the CTO can speak confidently enough about the product and vision, otherwise -unless specifically asked by the VC - come alone. Fundraising is a big distraction to building and a good VC will always respect that in a first meeting, the CTO can be excused from attending in priority of building product. Happy to talk to you both on a call about helping get you feeling a bit more confident and prepared before your meeting. I was formerly a VC associate for a $500m fund and have raised money from VCs as a serial entrepreneur.Tom WilliamsTW
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.
