How a VC thinks (1/3)

Let’s focus first on our side of the table. On your side, you work, grow, think of the money you need to grow accordingly to your plan, prepare your pitch (with an intermediate’s help or by yourself), contact us and then have an appointment. What does it look like on our end?

Funnel – Although you are unique, you first appear to us in a funnel of opportunities to investigate

VCs are constantly managing a funnel of opportunities (on our side, we receive 1500 opportunities per year, with a constant level of 100-150 live opportunities). The goal for an entrepreneur is not to be a wonderful deal – yes, you are going to take up the world, but that’s later. For the moment, you need to focus on being the “best deal of the moment” that we could invest in. You cannot imagine the “competition” of deals in our pipe (just imagine it is higher than the competition of term sheets you need to decide between). Even if you have a good project, you might be not selected.

What is “the best deal of the moment”? Entrepreneurs with a track record (we look at people first). A market meant to grow (that we need to be presented, in metrics). A product that “brings something” acknowledged by a cohort (so that we “know” what it can be).

Also, you need to be aware of our investment scope: the “best deal” for one VC is not the same as the “best deal” for another – do we already have a company doing what you do in the verticals we cover, for example? If yes… you may not be the best for us, but for another VC, yes! Or perhaps you are too small, or too big, etc…

A piece of advice: a long lasting relationship with us (catch-up, update, email,…) is key to be contacted by VCs when windows of investment are better for your project. A best practice on this aspect is to keep informed key VCs on your evolution every quarter even if they refuse to finance you.

Time – The time we take before getting back to you

VCs love to have time to analyze a project as this phase (pre-investment) is very good to evaluate the live execution of the project before investing. We have a totally different timing pressure than entrepreneur: time is our ally as we use it to have constant information on the company whereas time is an enemy for an entrepreneur who is in emergency mode.

Time management could lead to major misunderstandings between VCs and entrepreneur, and our priority is to support you, not to hamper you… The only way to reconcile our timetables… is to share them, and agree upon them. You have short deadlines, limited time availability, tell us, rather than be concerned that we do not get back to you appropriately. And we will tell you if we need more time, too.

My best advice: communicate on your deadlines. You are our priority, since what matters is your business. Deadlines, communications and exchanges will minimize your input and allow us to address the investment opportunity you represent in a reasonable timing for your business.

VC Value-Added – It is not only about us choosing you, it is about you choosing us

Every VC is the best (especially me).

Unfortunately the addition of claimed first tier VC will give you 80% of the VC market! You should know and check with whom you are working (which, by the way, is a good thing to manage time – see above J).

Don’t hesitate to interview CEOs in VC’s portfolio to check it. Value added is the most difficult thing to provide for a VC but it’s also the easiest thing to claim. As it’s the case in all business relationships, entrepreneurs should do minimum check on the quality of their future partners.

Where does our value stand? In our contribution to boards, in our knowledge of the market and how we can help you define your strategy in your regular board meetings. In our address book – who can we put you in contact with to hire, to prospect, to partner, to grow, to raise more money…

Conclusion: learn to establish a relationship with us, one that involves regular catch-ups, clear visibility on your priorities, deadlines and status. And learn to know us. The more we communicate, the more we get to know each other – nothing will be lost out of that.

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