👰-👰🤵-🤵 How to pick your Best Person/Bridesmaid
If cofounding a startup is like marriage, choosing the VC is like picking the Best Person/Bridesmaid. They counsel you through the ups and downs, while offering you a mortgage loan. You ought to choose them carefully.
Analyse the options
"All funds are equal." said no one ever. Let's see why that is.
Ticket and stage varies. Simply put, do not approach a later-stage fund if you are closing your seed stage.
Industry focus differs. Why would you reach out to an agritech fund to pitch your e-bike startup?
Firm dynamics are unique. Senior partners have the last word, junior partners are bolder and possibly more eager to support (Medium). Keep that in mind when you decide whom to approach.
Timing is key. Funds' 10-year lifetime makes it hard for a latecomer to be backed or to benefit from follow-up investments.
Ask the right questions (Forbes <- here they are).
Approach the candidates
If you are a first-time entrepreneur, chances are that you have a solid network, but not many investors in it. That should not scare you off: networks grow through referrals and via cold emails, albeit at a lower conversion. Gauge it carefully.
Time is limited. You might want to talk only to VCs that are the right fit. Efficient approach, but not particularly resilient. In particular seed-stage investing is more a matter of conviction than investment thesis (sifted), so accept unsolicited intro and speak to them all... on their own terms. The more the investors understand your business and engage in the conversation, the higher the chances you have to move forward in the funnel (sifted).
Arm yourself with a crisp investor deck, a great narrative and a huge amount of enthusiasm.
Even if you do everything by the book, you are going to be rejected multiple times. Do not be surprised. VCs talk with hundreds of startups every year, but will only invest in a handful (Crunchbase). By definition their job is to say “No”, or better "Le me know how I can be helpful" (VC Starter Kit <- insightful and fun).
How should you react? First, do not be emotional about it. In spite of the effort you put in your startup, never stop assessing it in an objective way. Second, follow-up and thank them for their time and feedback. This will leave the door open for future opportunities. Finally, keep in touch with your VC contacts. The future is unknown and your interests might eventually converge.