23
May

Ask a VC: Investment Etiquette 101

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For most startup founders, it can be difficult to get the attention of a venture capitalist. Some have a flood of startups in the pipeline, others have specific things they’re looking for in a pitch and a limited attention span.  In this week’s Groundswell Startups Podcast, we sit down with investors Bud Deffebach and John Vecchio to find out what a founder can do build credibility with investors and maintain it.

Podcast highlights

It’s all about the initial encounter. Your introduction can make or break any chance for a follow-up meeting with investors.  An intro from a mutual contact increases the chances of securing a meeting with an investor, as the investor knows that the entrepreneur has been vetted by someone they trust. “You have to find connections, ways to get to those investors – and there’s always a way to do that; I would work very hard, try to make that happen,” Vecchio said.

Don’t harass a VC. “Investors drown every day in emails from companies seeking capital,” Vecchio said, “so don’t bug them.” The standard response time for a VC can be up to a week and investors will turn away when the emails and calls become too much.  

Know what you’re presenting. Once introductions are made, entrepreneurs must sell the potential investors on their company.   An entrepreneur pitching their company to an investor should clearly define the business and technical aspects, informing the investor exactly what they are presented with.  An investor loses interest if they are forced to fill in details of a company themselves.  

And do the research.  Any VC website will make it clear what they do and do not fund.  An investor who specializes in software might walk out of a pitch on hardware widgets. “Know what they’re interested in, know what they fund,” Deffebach said.

“A deal-killer from the get-go is asking everyone for an NDA,” Deffebach said.  “There’s no way we’re going to sign NDA’s,” Vecchio added, “with all these different companies we try to keep straight.”

Be sure to follow up.  Entrepreneurs should follow up with the investor after the initial meeting.  Recap the meeting, provide contact information and let the investor know that their time was appreciated.  The key for successful interactions with investors is etiquette.

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