What if I told you something which you’ll NEVER get to hear from any VC?
What is that one thing that no VC will normally divulge unless you have one of your kindergarten friends working with that firm? Yes, a chuddy friend on the other end and even then the chances of he revealing this to you is only 50%!
There are tons of articles and guides you will find online, telling you about 100s of elements that you got to compile for presenting to a VC
- What is your competitive moat?
- What are your key metrics?
- How is your startup stacked against the competitive landscape?
- What are the micro & macro factors in the play in your respective space?
- Are you building a deep tech product?
- What is your 3 year or 5 year projection?
- What is your firm’s valuation?
- How do you intend to use the new capital?
- Is your startup CAPEX intensive?
The list goes on and I assure you that all of that is very important while you spend those months (and in most cases real money by employing professionals to help you with the deck & financial projections) preparing that deck for investor.
But, for a simple oversight of that one thing, which I am going to tell you shortly, you end up eventually getting turned down after every breathless talking you do with VCs.
You wait for a week after the presentation, only to get a mail in you inbox saying;
“I think you are building something of great value but however we regret to inform you that we will pass this opportunity for now. We wish you great strides in building your startup to higher levels of success”
Does the above sound familiar? If so, read on…
Your heart sinks immediately after reading this response.
You did everything possible by indulged every cell in your body into that presentation, only to get the above response.
Why is that? How can you increase your chances of success by almost 100%? Is there a one question that you can ask yourself (& by that find an answer too) at every stage (or slide of your deck) of the presentation?
That one question: “How do I help the partner or associate (the one who interacts with you, listens to the presentation & makes the case) to sell this story to his/her Investment Committee?”
A VC firm is primarily divided into two compartments – startup facing team (those who listen to pitch decks and make an investment thesis) and IC (those who approve the investment thesis).
The former will always be working under pressure (though you might assume that they are at the giving end and hence are the real Kings of the game), to successfully sell their shortlisted thesis to the IC.
Everytime they get one of their theses shot down by the IC, it is like some imaginary credit point being exhausted or wasted. End of the day, it is all about every thesis being a reflection of their effectiveness in evaluating a proposal, their business acumen, their power to swing things favorably, their ability to convince people on an idea, etc.,
And trust me, the stakes are very high for these guys when it comes to the afore-mentioned points. They would not easily risk it for it is directly proportional to their existence in the firm or in the VC circle!
They are worried all the time about this, in every founder meeting they are present. They just don’t reveal it but this is what is running at the back of their minds.
If you have the perfect answer to this one question, against every point (or on the key points) related to your startup, you are making it a lot more compelling/simple for them to work on your case.
By asking this one question against every key aspect of your startup (and by discovering that answer), you are beating the odds of getting funded, pants down.
I am not over simplifying this by stating that a mere act of “asking a question” will result in the answer dawning upon at the same instance. Finding the answer involves due amount of deep dive into soul searching.
However, I wish to contend that how many founders even think about this – putting themselves in the shoes of the VC interface and imagining how do I make a compelling case for him to trickle down further in his firm?
For example, any early stage investor would want clear answers to give to his IC, what will be the possibility of their exit at Series A or B or so on. And so on for every later stage investor, for stages there on. Everyone is worried about exits.
Exists are the start all and end all of the VC game. Period. And that’s what should encompass the answer to that holy grail question. By this, you swing the equation favorably amidst 10 other founders barking at him for the same pie of investment dollar!
Does your deck, the information contained in it, your pitch, your communication, your data, etc talk about how your scale, competitive moat, deep tech, operational metrics, etc., create an exit for that VC?
Does it come out so clear that he or she doesn’t need to run around searching for that needle in the haystack? All so obvious and clear for him to convincingly build a case for your startup?
Do you agree with this being a make or break clue for succeeding in fundraising? Please leave your comments below.