In many cases, I am the first point of contact that a company has with OpenView, and typically it takes place via a 30-minute or hour-long call. Standing between that call and the morning the founder or CEO wakes up with funds wired into their account are a long line of hurdles and boxes to check (on both sides) in order to figure out whether a deal makes sense for both parties.
With that in mind, here are three guidelines on handling that initial call that can help you set the tone of the relationship and get the investment ball rolling.
1) Get a Feel for the VC
You’re looking to get answers to the following questions:
- What types of companies and markets does the VC typically invest in?
- What stage do they participate in?
- How do they add value in addition to capital?
For instance, here at OpenView we invest $5-15M solely in expansion-stage enterprise software/technology businesses and provide a full service operational support team exclusively to our portfolio companies who assist in the areas of sales & marketing, market research, and recruiting. Once you understand the VC’s focus, stage, and approach then you can shape this into a hard sell for you current round or a relationship-building call for future rounds (or walk away if there is clearly not a mutual fit).
2) Succinctly Describe Your Company
Be prepared to provide answers to the following questions:
- What pain point are you solving for your customers?
- Who are you targeting?
- What differentiates you from your competitors?
- Where are you from a stage perspective?
- How have you funded the business to date?
- What are your fundraising plans moving forward?
There are countless articles on the importance of those first three questions (and countless tips on how best to answer them), but they really can’t be stressed enough. My suggestion is not to simply rely on terms like Big Data, MDM, and Machine Learning. Instead, go further and speak in real terms explaining exactly how customers are using your software and why it is critical to running their business (describing 1-2 use cases is very helpful).
The next 3 questions are pretty simple but sometimes I run into companies that don’t want to share revenue/funding information, which I understand — to a point. Honestly, why waste time with NDA’s or asking to talk to a partner who will quickly shut down the conversation if the market doesn’t interest them or the metrics don’t fit their investment profile? You are running a business where time is your most valuable commodity, so why be coy with numbers? It just drags out the process and takes away from minutes and hours you could be using towards building your company.
3) Assess Whether There is a Fit and Establish Next Steps
So you’ve liked what you heard from the VC about their approach and in turn the VC is interested in your company. If it is determined there is a mutual fit, next steps should include setting a follow-up call with a partner or an in-person meeting.
If you are raising money now then you will need to meet with a partner and potentially begin diligence. If it’s too early stage-wise or you are not currently in fundraising mode, then it is critical to establish who will be the person (i.e. associate or partner) who will be championing your company moving forward. From there, circle a date on the calendar when you feel it would be appropriate to re-engage for an update or to kick off the fundraising process (for example, this could be the next time you are both in the same city).
To some, this may all sound logical and go without saying, but often initial conversations are filled with sifting through buzzwords and pressing for financial details that founders/CEO’s may feel uncomfortable providing to someone who they just met over the phone. While I sympathize with this, ultimately time is just too valuable to waste for both of us. You are trying to grow a successful business and we are trying to find opportunities to invest and help build great companies. Nothing beats being prepared to ensure the introduction goes as smoothly as possible.