In some ways, nothing today has changed, and in other ways, everything has changed. So despite the current COVID-inhibited business climate, stick with this time-honored principle: control the things you can control. Don’t let today’s environment drive tomorrow’s bad deal. Regardless, there are VC firms that are using the current crisis to overreach.
Line up your meetings
Before anything significant can happen, you must ensure you can get VCs to the table. If you start reaching out to them only when it’s time to raise funds, it’s too late. Start lining up even casual meetings with VCs six months prior to your raise. Besides, the conversation is safer when you’re not raising money. In this phase, the goal is to secure early expression of interest and practice your pitch.
Strategize your pitch order
Save the best or most desirable VC firms for last. Have one or two meetings with VCs that either might not be the ideal fit, or angels or other people who can give commentary on the idea and the presentation. Memorize all the numbers relevant to your company backwards and forwards.
Every Pitch Tells a Story
Storytelling is essential to creating memorable and resonant pitches. Great stories are practiced; no pitch is static. Pitches evolve based on who you’re talking to, where you are, and what you need to convey. You should have an “elevator pitch (one-minute version), a 10-minute version and a 30-45 minute version. These are going to be significantly different versions. There’s no way to compress an hour of material into a minute. The one-minute version should “set the hook.” The ten-minute version should create interest, and the long version should close the deal.
Every VC firm has its own biases, over which you have no control. For example, they may favor certain business schools or educational degrees. But you can control knowing your numbers backwards and forwards, and exuding confidence without arrogance. Practice, practice, practice until you master both.
Weigh your options wisely
When the process is winding down, ideally you will have multiple offers. Money and valuation aren’t the only variables that matter. VCs are interested in the financial aspects of the deal, plus having control. Make sure you have thoroughly discussed the control issues with your attorney. Different levels of control are appropriate at different stages of fundraising. Personality is also a very real consideration; it should be heavily factored into your decision. Your relationship with your partner at the VC firm is extremely important. Location is also important, particularly in the first round of funding. Having a local VC can be quite important in the early stages. During later rounds, location becomes less important.