By Fernando Berrocal

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If you’re a brand-new startup entrepreneur, you’re likely seeking guidance on obtaining funding; specifically, how to get in touch with different types of investors. Venture capital groups are a well-known source of funding. In today's crowded and competitive business landscape, it is quite a feat to connect with VCs and land a meeting. Here, we will mention how to improve your chances of meeting venture capitalists and securing funds for your startup.

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Getting VCs to meet with you can be a herculean task to accomplish, particularly if your objective is meeting with the best investors in your area. This is an ironic situation; the actual job of a venture capitalist is networking with different startup entrepreneurs. So, the first question is: how do I get a primary introduction to VCs? In the next paragraphs, we will mention the most harmful - and ideal - approaches.

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The Worst Method to Contact VCs

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Who should you avoid approaching in a business meeting? The Entrepreneur in Residence (EIR) of a venture capital group. You must know that there may be a conflict between your business interests and the interests of an EIR. Anytime a such a conflict of interest occurs in business, it’s a bad thing for both parties. As a result, it's crucial to keep in mind that these individuals are investing in the project's potential–not in your interests. 

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Furthermore, an entrepreneur in residence probably won't have the ultimate word - or the power - to seal the main transaction. An EIR is mainly a person who is momentarily jobless, and inspired by the chance to contribute to and invest in a business. The EIRs are not interested in negotiating deals on behalf of the venture capital group. So do not waste time with an entrepreneur in residence by any means.

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The Best Method to Contact VCs

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On the other hand, a person with a good track record of successful investments at a venture capital group is the perfect candidate to get a recommendation from. Sometimes, these individuals are successful startup Chief Executive Officers (CEOs).  Usually, they have personally generated profits for the group itself, and they can provide first-hand experience of what it takes to make profitable deals happen. CEOs are similar to ”superconnectors"; well-known individuals who hold the trust of a large group, and have a huge network of contacts. 

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CEOs have typically launched a business (successfully) and met several investors.  Bear in mind that they might not want to bring someone problematic into their professional network. The people who work at venture capital groups are aware that CEOs will be selective; and that practically everyone in their network is hunting for these referrals. Remember:  only 1% to 3% of CEOs produce exceptional achievements. Startups frequently fail and frequently declare bankruptcy or fail altogether. Nothing is worse than having a CEO present you to VCs with a firm that is only worth $10,000. If you are, it's practically a guarantee that you won't hear back from them.

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Another Approach for Getting in Touch With VCs

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A good technique to get in touch with a VC is through referrals of investors. Meeting other VCs through fellow investors can be the ideal introduction, especially if they are eager to join your investment round as well. They are expressing to a major investor their interest in your business–perhaps even their willingness to put up millions of dollars.  Bear in mind, however, that even while an investor could be a wonderful method to get in touch with other VCs, they might not be eager to fund your firm.

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Note: avoid uncomfortable email introductions to new investors from previous ones who declined to invest in your concept.  The second investor will likely end up asking themselves, "What’s going on? Why should I invest if you didn’t?”  In general, refuse introductions that arise from situations like this–potential investors should have the opportunity for genuine interest in your business from the get go. Find the ideal individual to contact the business, and devise a different introduction strategy.

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To recap, when looking to establish contact with venture capitalists you must do your research thoroughly. It's critical to collect your insights before contacting VCs–they're extremely busy professionals. Make sure you are aware of their investment philosophies and areas of interest. Then, establish a connection with them. After you've completed this step, give them some of your time - pitch to them within an agreed-upon time frame, and genuinely listen to their feedback. This step is vital to the longevity of your startup, even if you disagree with their reaction(s).  Don’t forget to thank them for their time.

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Remember: informal emails to VCs (or any professionals, for that matter) are often not a smart idea.  They are unlikely to be read, and even if the message is opened, such emails could create the wrong impression.  Untimely, poorly-worded, or overreaching emails can convey the notion that you lack resources or a personal network to secure suitable business introductions. This might weaken your credibility, or give the impression that you simply don’t understand the fundraising process.

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At MassLight, we do more than advise startups–we build them with our equity-based programs, designed to help startups launch and scale.  To compliment our capital investment, our engineers and mentors work alongside your team.  There are no fees involved; we invest all resources previously mentioned in your startup in exchange for an equity stake.  Submit an application on our website today!

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Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.