The amount of venture capital financing raised is lower than it has been in years, which of course makes the market more competitive for would be portfolio companies hoping for a slice of that pie. But how can you improve your chances? A new article in the Wall Street Journal proffers some thoughts on what VCs are looking for and what turns them off. The key is to present a clear, concise, and realistic plan. It is surprising how easy it is to overlook these simple concepts, but sticking to the facts will at least give you a shot in this market.
While we are talking about getting the most from your meeting with your VC of choice, keep in mind a couple of other tips to avoid failure:
- Think carefullly about that NDA. One thing to understand about the people in the VC community is that they are looking at plans constantly to find new investments. You will see many VCs who say they won't sign NDAs because it is not practical (and you might hurt their feelings). This does not mean they won't - there may be times when a NDA is appropriate - but think about how you want to start off your relationship and whether a NDA is truly necessary.
- Know your VC. Your meeting will be short. You need to spend the time you have getting your idea across. Do your homework on the VCs that you meet. These days, VCs are all over the Internets telling the masses everything that pops into their heads. Check out Venture Maven or some VC blogs to see what I mean. Before you walk into the meeting, you should already know what interests - and does not interest - them (and maybe even what they were up to last weekend). Personalize your approach and don't waste precious time in the meeting discussing things that should have been part of your homework.
- Bring concrete and realistic ideas. VCs do not have patience for your bad assumptions or, worse, your ego making irrational and inflated claims. There will already be enough egos in the room. You have to generate excitement but you also have to show how your idea is the solution to a problem and, more importantly, how it is realistically going to make money.