blogging.vc

Yesterday, I got a call from someone doing a survey on “What are the most frequent mistakes entrepreneurs make when approaching VCs?”, which motivated me to write up the second part of my FAQ. If you know the VC game and industry you should skip this post, but if you think VCs pull their deals out of a special mailbox for business plan submissions, read on. While VCs would love to take time to sit down with every entrpreneur who’s got a compelling, relevant business opportunity for them, all of us unfortunately get a lot of unsolicited proposals which are just not a fit and processing them can take lots of time. Hopefully, the below will help avoiding having your proposal rott away along with 23 other business plans for used machinery part retailers or other supposedly “best deals of the year for your firm”.

Question: How do I find out what VC could be a good fit for my company?

Before figuring out how to approach a VC, let’s talk about who to approach. If you don’t know the VC’s in your industry, it’s not an easy task to identify those firms that would be most likely to have an interest in your venture. If you find a VC who knows your business, not only will you have to spend less time explaining what you do, you’ll also be talking to a potential partner who can hopefully be of real help in case he invests. Personally, I have yet to find a free database on the web that lists all VC firms and reliably breaks them down into areas of focus, so I think you’ll have to go a more cumbersome route. My advice would be following these (very obvious) suggestions:

• Look for companies that are not direct competitors but operate in the same market environment as you do. Check their websites and look who funded them to get an idea of what funds are active in that area.
• Check out the speaker and attendees lists at relevant industry conferences. VCs frequently attend conferences to stay up to date and generate deal flow, so while it’s a great place to meet them in person conferences’ attendee information can be a valuable source of data for you.
• Subscribe to some Venture Capital newsletter such as the free VentureWire Alert and monitor which firms are active in your field.

Question: How do I get the meeting?

Ok, you have found a firm that could be a good fit. Now how do you get in touch with them? In my view, the most important piece to remember is this: You want to talk to a specific investment professional at a firm, not to just anyone at the firm who takes care of incoming business plans. Therefore, take a good look at the people at the firm and check the follwing:

• Is there a way to get a personal recommendation from someone the investment professional values? Check your network for common contacts. These tend to be the best way to get immediate attention from the VC, but of course not everyone has the right network for this.
• In Europe it’s much tougher to meet VCs at events then in “cluster” areas such as Silicon Valley. However, conferences tend to be a great place to chat up someone from a VC firm of your choice.
• If you can’t find a personal angle, try to go the direct route. I always prefer to get an email that’s followed up with a call, rather than the other way round. To me, the perfect “cold call email” should be very short (a few paragraphs) and have a short summary attached (~2 pages). In the email, I would spend a brief paragraph introducing yourself and stating why you think your project is relevant for the investment professional and their firm. I’d spend another paragraph on the description of your project, but boiled down to key ingredients such as the overall value proposition, the attractiveness of the market and the momentum you currently have.

Remember, no matter what route you choose you are only trying to get to the next step, which is a phone call…so you just want to create some appetite, rather than explaining detail on Exhibit 3c of your business plan. Offer a brief phone call as a next step. Follow up the email with a phone call a few days later if you haven’t heard anything.

What you should definitely avoid

• Never email to the info@….com address or call and ask for “the person who processes business plans”. Your chances of quickly getting to the right person are just too low.
• Never email a 50 page business plan as the initial piece of information. It may be a piece of art, but it’s just too long for an initial check whether the opportunity at hand is a potential fit.
• Don’t call the investment professional immediately after sending your plan, and if in your first follow-up call you get a “I haven’t had time to look at it..” don’t call again the next day. Persistence is good, but remember that he VC has a bunch of opportunities on his desk at any given time. By calling too often you’ll not only bother people, you’ll also show that you don’t have other compelling options.

I hope this helps a bit to navigate the business plan submission maze…and if after reading this you feel like your plan could be a fit for BV Capital, then yes, do feel free to email me.

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