Think Like a VC
Mohanjit Jolly
Executive Director,
Draper Fisher Jurvetson India
Draper Fisher Jurvetson India
1. Choice of investors:
The spectrum of investors includes angels and seed investors, venture capitalists (typically early and mid stage investors), and growth or late stage private equity firms. Each of these groups has its appetite (investment amount), experience, process, stage, and sector focus. Entrepreneurs should do some research on which of these would be the right category and the right partner within that category for their venture.
2. Get an intro:
In India, bankers are the norm and a completely acceptable intermediary. Having said that, it’s often not appropriate for truly early stage ventures to be working with a banker. The ideal mechanism for getting to a VC is through networking. Get to them directly at an event or via an introduction from an advisor, a friend, a colleague, or a service provider (like a lawyer, consultant, or accountant). Honestly, I tend to pay more attention to the introduction made by a trusted friend or colleague than something that comes in cold.
3. Stand out:
Remember that a VC might get several plans every day. The key really is to be different, but in an outstanding way. Use the first two sentences of the initial paragraph, whether in an email or executive summary, to get the VC’s mindshare. If I am not engaged or hooked in the first two or three sentences, you have lost my attention.
4. Be concise:
Follow the 2, 10, 20 rule. Have a two page executive summary, 10-slide PowerPoint presentation, and 20-page business plan. At the early stage, when there is no operating history, often an incomplete team, and a little more than ideation, it’s often a few presentations and face to face interactions that result in an investment. It’s about the gut feeling, than a deep x-sigma analysis.
5. Fine line between persistence and annoyance:
It’s ok to follow up if the VC has not responded to your initial email asking for a meeting. There are times, due to travel and the like, when I am unable to get to email for a couple of days by which time 250-300 emails have piled up - and yours may fall through the cracks - and I reply after about a week. Most VCs do make it a point to at least respond to emails. Do not keep pinging every day for about a week to ten days. That is annoying.
6. Get to the point:
The email or initial introduction by a trusted party is only the bait to get the initial meeting. The key is to wow the VC in that first meeting. Be on time, prepared to spend no more than an hour (30 minutes and prepared remarks or 30 minutes of Q&A), and get to the point rather than philosophizing or educating the VC on the market for half an hour.
The spectrum of investors includes angels and seed investors, venture capitalists (typically early and mid stage investors), and growth or late stage private equity firms. Each of these groups has its appetite (investment amount), experience, process, stage, and sector focus. Entrepreneurs should do some research on which of these would be the right category and the right partner within that category for their venture.
2. Get an intro:
In India, bankers are the norm and a completely acceptable intermediary. Having said that, it’s often not appropriate for truly early stage ventures to be working with a banker. The ideal mechanism for getting to a VC is through networking. Get to them directly at an event or via an introduction from an advisor, a friend, a colleague, or a service provider (like a lawyer, consultant, or accountant). Honestly, I tend to pay more attention to the introduction made by a trusted friend or colleague than something that comes in cold.
3. Stand out:
Remember that a VC might get several plans every day. The key really is to be different, but in an outstanding way. Use the first two sentences of the initial paragraph, whether in an email or executive summary, to get the VC’s mindshare. If I am not engaged or hooked in the first two or three sentences, you have lost my attention.
4. Be concise:
Follow the 2, 10, 20 rule. Have a two page executive summary, 10-slide PowerPoint presentation, and 20-page business plan. At the early stage, when there is no operating history, often an incomplete team, and a little more than ideation, it’s often a few presentations and face to face interactions that result in an investment. It’s about the gut feeling, than a deep x-sigma analysis.
5. Fine line between persistence and annoyance:
It’s ok to follow up if the VC has not responded to your initial email asking for a meeting. There are times, due to travel and the like, when I am unable to get to email for a couple of days by which time 250-300 emails have piled up - and yours may fall through the cracks - and I reply after about a week. Most VCs do make it a point to at least respond to emails. Do not keep pinging every day for about a week to ten days. That is annoying.
6. Get to the point:
The email or initial introduction by a trusted party is only the bait to get the initial meeting. The key is to wow the VC in that first meeting. Be on time, prepared to spend no more than an hour (30 minutes and prepared remarks or 30 minutes of Q&A), and get to the point rather than philosophizing or educating the VC on the market for half an hour.
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Reader's comments(1)
1:
Excellent info. Thanks for deep / systematic info.to get prepare.
Posted by:Dr J K Nigam - 21 Sep, 2012
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