Philadelphia VC & Investor Roundtable
Hosted by FundingPost
Touchdown Ventures – Jack Taylor, VC
Robin Hood Ventures – Ellen Weber, Executive Director
Andrew McDermott, Angel Investor
Activate Venture Partners – Glen Bressner, Managing Partner
ARC Angel Fund – Michael Kelley, Founding Member
Cross Atlantic Capital Partners – Carter Caldwell, Principal
Rittenhouse Ventures – Saul Richter, Managing Partner
Leading Edge Ventures – Jeff Davison, General Partner
Moderated by David Sorin
Managing Partner & Chair of the Venture Capital
and Emerging Growth Companies at McCarter & English
Funding Post – an angel investor and capital network – recently hosted a Philadelphia VC & Angel Investor roundtable with partners from eight local investment firms focused on various stages of startups. The panel discussion was chock-full of tips and best practices for how to get your foot in the door with investors. Here’s what we learned.
Know Your Investors. Know Their Interests.
“Do your homework, and show the work.” Fully research each investment firm before you reach out. In addition to reviewing their website and current portfolio, check out their LinkedIn business page, follow them on social media, etc. What are they showing interest in? Do they invest in your industry? Your company stage? Do you fit their investment criteria? Is your ask in-line with their typical investment size? Where are they in their investment cycle? Thoughtfulness gathers attention, and considering these points before you send your pitch deck will increase your odds at landing that meeting.
When a Well-Crafted Email is Not Enough…
Aside from wow-ing VC’s from the cold with your amazing pitch deck and knowledgeable approach, there are some other key ways to get a meeting scheduled. And what is THE number one way to get on an investors’ calendar? Referrals. If you’re having trouble getting your foot in the door, you’re going to need one of these. The strongest referrals come from other investors, professional service providers within the investor network (accountants, financial consultants, legal, etc.), or an entrepreneur in the firm’s current portfolio.
How do you get the referral, if you need a referral to begin with? Well, this is where “The Network Effect” comes in. In order to receive the most value from the resources that are available, you need to build your personal network. It’s okay if you do not have a first-degree connection with your dream investor (or any investors, for that matter). It’s okay because there is someone else out there who does – and you’ll meet them. When you get into the mix, make sure you have a stand-out quick-pitch ready – you never know who you’ll run into! You might generate sales leads, investor connections, partnership opportunities – there are endless benefits when it comes to building your network. Be sure to follow up on any promising conversations you have, and don’t be afraid to let people know the types of help or connections you’re looking for.
Do You Have What It Takes?
Okay – you got the meeting! Your pitch deck looks awesome, you know what you’re going to say, you know what you’re going to wear, you got a haircut. You are PUMPED! Now, the materials you present in this meeting are highly important, but – of equal importance – are core qualities and behaviors that investors look for in the founders themselves.
By far, the single-most sought after trait is honesty. Honesty leads to trust, and trust leads to a happy and fruitful relationship for everyone. Be sure that you know every aspect of your business and the skills needed to make it a success – and when you don’t know, just be honest about it.
Emotional intelligence is highly valued and can be evaluated through a variety of ways, including presented emotions, listening skills, and ability to respond under pressure (some of which you may not know the answer to yet). These skills show how coachable and adaptable you are and are great indicators that the relationship could work culturally and financially.
The Importance of Co-Founders
You need a partner to share not only ownership of responsibilities with, but also your ups and downs. This is why firms prefer to see a CEO/CTO duo as opposed to a single founder (or even a trio).
Though the panel unanimously recommended against spouses or family members as co-founders, none were completely against investing in startups with this type of leadership in place. Investors know that having a healthy work-life balance in place is key to long-term success, and with a professional partner (vs. someone you go home to) to share responsibilities with allows for an easier separation of work and home life. No matter who is in charge, be prepared to show that you are a power team and that you’re in it to win it.
“It’s Not Like Shark Tank”
The valuation process is not what TV makes it out to be. It’s really a double-check so that VC’s can know you’re being realistic with your company valuation. Valuing too high can be just as detrimental as under-valuing.
Don’t pull this out of… thin air – have the numbers to back it up! Be sure to research what other companies like yours have valued at. If you can’t find another company that is exactly like yours, base your comparison on another company of similar size, growth rate, and revenue to yours to get started.
What NOT To Do
- Don’t be afraid to ask for help, even if you’re not investment ready. It will help establish the relationship.
- Don’t lie to impress the VC. “We want someone easy to communicate with and transparent.”
- “Don’t use us [investors] against each other – you’ll need a combination of us to get to where you need to be.”
- Don’t lie to yourself if you don’t like the VC relationship. You can walk away.
- Don’t fudge the numbers. Period.
- Don’t say “We don’t have competition”. YOU DO!
- Don’t be “The Uber/Grubhub/Yelp of…”. Be your own description.
- Don’t jump right into asking for money. Everybody wants a successful, healthy, long-term relationship – you must build that relationship first!
- Don’t say “I don’t want to give up control”. VCs aren’t there to control the company – that’s your job!
- Don’t label your first-year financials as “Year 1”. Show your commitment! Be clear about your projected timeline – label the years. Oh, and definitely don’t include pennies.
One last tip: Always ask for feedback, even if the firm won’t invest. Not only does this practice give you valuable insight into your own pitch and habits, it will help build the foundation for a continued VC relationship and opens the opportunity for that coveted investor referral.