I had an interesting conversation with an entrepreneur last week about how he decided which VCs he was going to pitch. Mostly, it was a function of who he could get introductions to. No matter how much I or any of the team here at First Round made themselves accessable through Office Hours, LinkedIn, Twitter, speaking, blogging, etc., he was always going to go where he already had the warm intro versus going in cold. Made sense--and made me think I need to spend more time trying to get great intros from the people I know and trust.
At the same time, I had lunch with someone yesterday who regularly ran into early stage entrepreneurs who was surprised to hear that I didn't mind if they made intros to me. She didn't necessarily feel like she knew which ones were promising or not and didn't want to "waste my time." I reminded her that vetting through people and ideas to find the most promising ones is actually what I get paid to do--so if something wasn't a fit it wasn't a big deal at all.
Then I realized that it's probably not obvious what the dynamics are around how VCs tend to get introduced to companies and what works best for people, so I figured I'd blog about it. Different VCs might have different preferences, so when I say "how to make an introduction to a VC", I can really only speak for myself, to be honest, but hopefully other investors will chime in.
The Cold Intro
A lot of VCs ask to be introduced through someone. If the connection is a strong, trusted one, that helps, but to be honest, there are probably less than 50 people than I would just blindly take a meeting based on an intro alone. Reality is that we're probably connected in some way anyway through various social networks anyway and I'm very quick to figure out all of those connections to ask about you. So, if your connection can't really speak that much to what you're doing, or you want to save them time, feel free to just point me to LinkedIn and tell me who we know in common that you think would provide a good reference. I don't mind cold intros at all--but it's hard when I can't figure out who you are in the context of my network. Just make sure you're easily findable on the web and various social networks so I can pinpoint your location in the graph within a few seconds.
What I really want to know in the following order is a) link to what you're doing or, if you don't have that b) a brief (4-6 sentences) description about what you're doing and just a sentence or two about why you're the right person to do this. It also helps if you're in the middle of a raise or there's a timing issue to know that as well--or if you're just looking for feedback.
Tough things to ask for? Phone. Honestly, I hate the phone. I'd much rather meet you in person than talk to you on the phone. The phone is near on my desk, next to my computer. In other words, there is a ton of visual distraction in front of me when I talk on the phone and I have a terribly hard time with that. In fact, I don't believe I've ever gone from a phonecall to an in person meeting. For me, phonecalls seem to have a 0% hit rate so far. This is different for other VCs and undoubtedly different for other people at First Round--so always ask what method of meeting people would prefer.
The other thing that people do sometime is try and get the super short in person meeting by saying "I just need 5 minutes in person to explain to you what I'm doing." First off, no VC meeting in the history of the universe that didn't take place in an elevator ever lasted 5 minutes--so that's just unrealistic. Plus, you're really shortchanging yourself. Your one pager will do a much better job via e-mail than you will in 5 minutes nine times out of 10. A link to your site will do even better. Let the investor work through their process. It takes investors a long time to figure out a process that works for them--and trust me, they want to try and meet everyone doing interesting stuff and have those meetings be as productive as possible. If they work best via e-mail, and then an in person, let them work through that. Don't try to skirt the process.
And never, ever, randomly show up at a VCs office unannounced. Honestly, it's maybe the sketchiest thing you could ever do. It's the kind of thing that makes an office manager glad that the Principal who sits just a few feet away from her is a black belt in Tae Kwan Do.
The Warm Intro: Direct or Not Direct
Should you ask first before introducing someone? There are a lot of great intros I get directly, with the person being introduced on CC. I never think twice about it--until, that is, I get a really bad intro. Bad intros usually include some service provider, like some high net worth management guy looking to get me to invest with him. Really? Why did I need that? What value are you offering to me with that intro?
It's never ever a bad intro when the person on the other end is a passionate entrepreneur. I don't care if the idea is completely unworkable. That means the question of whether or not to ask first really depends on your relationship to the entrepreneur and their expectation level. Feel free to intro anyone directly, but know that I'm not going to take every meeting. I will, however, try and provide an explanation and some useful feedback. I just don't want you to look silly when you say you know me well, you make the intro, and then I turn around and say that I've seen a lot of similar models and just can't get there on it because of one reason or another, without taking a meeting.
At the same time, don't try and overthink what I might find interesting or not. That's my job, and half the companies we've wound up investing in are probably things you'd never think we'd go for. Vintage inspired women's clothing? Check. Lending to small businesses. Check. Insuring yourself against bad weather. Yeah, we did that. And these represent some of our most successful investments. So, pinging me with a quick check on whether an idea is interesting is totally welcome, and I'll usually give a quick response back. If I don't... feel free to forward it back to me again with a gentle nudge to see whether I saw it. I try and respond to pitches right away.
In person time is precious. I have a limited amount of it, and more importantly, so does the entrepreneur. When you add up the time it takes for them to get to my office and back, if I already know I'm not going to get there on something, the last thing I want to do is to take up that much time from an entrepreneur. So, don't be put off or disappointed if you can't get the in person--I'm really just trying to respect your time.
Whenever an early stage entrepreneur tells me they're not raising capital, I always say, "Ok, well, I was going to give you $2mm on $20mm pre, but since you're not raising..." You're always raising--it's just a question of at what price. You may decide that where you are now compared to where you'll be in three months isn't a good time, and that's fine, but let's not pretend that you're not a tech entrepreneur in the office of a venture capital firm. That's kind like when people meet in *those* sections of Craigslist tell you they've never done this before.
In general, most early stage investors and angels are ok with you approaching them as early as possible--but be advised that their response is going to be commensurate with your demonstrated level of committment to a project and your focus. So, if you ping me with "I'm still working my big corporate finance job... What do you think of the group buying space? Would you invest in it... I have an idea," don't expect me to write much more than, "It's pretty saturated, but if you get some traction on a differentiated business, let me know." That's not a game over response and I'm happy to meet with that person at some point in the future, but if you haven't quit your job, haven't built anything, and you're doing something that 400 people are currently doing, you probably won't get more than a sentence back from me. Seems fair to me.
There are a few areas that I'm really interested in at the moment--like calendaring, social white pages (I still can't find other Fordham grads who kayak and work in tech), and a few other random things--that I might take a meeting on even if you don't have anything yet, just to compare notes. Those are often pretty random, so I feel like it might be worth dropping me a line. Oh, and by the way, it's email@example.com.
Worst comes to worse, I tell you that I see an issue with something you're doing that makes it less than a great match, and it's good feedback. Maybe you address that issue and we can talk again in the future--actually, we can always talk again in the future. Talking to a VC is never a one shot deal. Of course, if I turn you down for an investment, if you keep hitting me up each week with tiny little amounts of progress, that might get a bit much. However, if you come back three months from now having addressed all our major concerns, it doesn't hurt to reengage.
This is a tricky one. On one hand, for a VC firm to make an investment in you, most of the time they need to get at least a few people on the team to buy in to the opportunity, if not the whole team. So, the more people who are familiar with what you're doing, the better.
At the same time, if 5 different people at the firm are talking to you at the same time without you making them aware, that's pretty inefficient. You need a champion within a firm to help you navigate the decision making process and to organize the conversations. So, doing the spray and pray to try and hit as many different people at once, without necessarily taking the time to build a deeper relationship with one person isn't going to work either. Let the person you met first or know best shepard you through the process.
So who should that be? Generally, you want an intro to anyone who can lead a deal--who sits on boards and can be point on an investment. That being said--don't ignore an analyst that you got an intro to them or met and most of all, don't try to skip over them. If they blindly reach out to you and you're not currently looking to raise money, I think it's ok not to respond (or maybe better to respond with a polite decline) until a partner gets involved--your priority is running your business and you can't take every investor meeting.
At the end of the day, the team is always going to circle back to the first person who met an entrepreneur (we keep a database of these things) and if you rubbed that person the wrong way because you treated them like a leper, don't expect as much of their support and enthuiasm when they're asked to do some of the due diligence work.
So how do you balance? If you already know some people at a firm, just make others aware of it. CC them or give them a heads up. If you went to college with Phin, but only kind of knew him, and you wind up meeting me at a pitch event, don't show up at our office without giving me or Phin the heads up. A polite CC on the follow up note is appropriate. "Hey Charlie, thanks for chatting with me at the pitch event. Just wanted to loop in Phin before we met since we went to college together. Would be great if both of you were available to meet. I'll let you guys figure that part out... look forward to chatting."
Otherwise, it's kind of odd when people you know well show up at your office to talk to someone else in the firm. It's not a territorial thing--it's more like, if you knew someone at a firm well, why wouldn't you give others a heads up that you were engaging to help your cause? If we have a good relationship, it only helps your cause to make me aware that you're talking to other people in the firm and vice versa. If Chris gives me big thumbs up on someone who I wind up in a meeting with, I'm going to lean forward that much more. By not bringing up other connections you have, it just makes you seem like a pretty unsavvy salesperson--the kind of entrepreneur that its tough to make a bet on to strike that big deal, win that customer, or court that hire. To go back to that dating analogy, if you dated someone's roommate, you kind of have to bring it up right away. Maybe it was one so-so date two years ago... that's fine, and I'm sure no one will have an issue, but you definitely want to be the person to bring it up.
Giving people the heads up on previous conversations you had is also important. I respect the opinions of my colleagues and I'm always going to check with them if they saw it first. Perhaps that was a year ago and things may have changed, but I'll always go to them first, so you might as well mention it.
So, in short, I try to have as many interesting, relevant conversations as possible, and if you can facilitate that, great. I'd love to get more intros from people I know to people I should know because they're building something, need specific help or a question answered that I can address, or because they're just that awesome (First Round portfolio companies hire awesome people all the time.) Just know that I can't take every meeting, but will always try to provide something useful in return for you reaching out.