How to Approach VCs

Posted by on December 10, 2009 at 12:10 pm.

I got a great set of questions from an entrepreneur (Delena) on an earlier post, concerning how to approach, qualify and follow-up with VCs. I’ve heard these tactical communication questions a bit more often in the past year so I thought I’d expand upon at least one of Delena’s questions here.

Delena asked “How long should one pursue a [VC] firm?” My first answer is to pursue appropriate investors until you no longer need funding, but the devil’s in the details.

Chum the Water, Before Baiting a Hook

chumYou’ve seen those deep sea fishing shows, right, where they throw meat out well before casting a line? This is especially true for shark fishing. Well, given how the popular media likes to equate VCs and sharks (think SharkTank), follow that same approach for engaging VCs. Reach out to appropriate VCs well before you need funding and start a relationship that invites curiosity or informal advice. Share what you’re doing, maybe an exciting announcement, and solicit advice, not money. Believe it or not, VCs are much more likely to engage if they’re being approached for their “infinite business wisdom” instead of their checkbook. This requires more legwork than just emailing executive summaries, but getting to know VCs before you need money is critical to getting their attention later. This also provides an opportunity to understand a VC’s hot-buttons so you can demonstrate progress on those prior to pitching for investment.

Be Persistent, but Polite

persistenceNow, once you have baited your hook and cast it out, what if you don’t get any nibbles? That period just after submitting an executive summary or business plan to VCs is one of the most uncertain for young entrepreneurs. What does silence mean? How soon is too soon to follow-up? My advice is to be persistent, but polite. Give VCs about two weeks to work through dealflow and review your plan, but after that follow-up weekly in a multi-modal, but polite way. This is a simple concept, but less than 1% of entrepreneurs execute on it. Follow-up emails, phone calls, and even twitter DMs should always stay professional, but push for the next step of call, meeting or feedback. VCs review thousands of plans a year and you want yours on the top of their inbox as much as possible — each ping gets it another look until they decide a formal next step. In addition to getting attention, this process also demonstrates to a VC how you conduct business — persistent entrepreneurs win customers, partners and top talent. The worst case of being persistent, but polite, is you get a “no” sooner than you might otherwise — but even that’s better than staying in limbo.

Gather Believers, Even if they Don’t Give to the Cause

believeWhat if you chum the water, bait the hook, follow-up in a persistent, but polite manner; and it still results in a “no”? Well, I’d suggest you are after two things when talking to a VC: 1) believe and 2) invest. A “no” on investment doesn’t foreclose the potential of gaining a believer in you, your product, or your market. Try to find out what area of your opportunity a VC does believe in, and what areas are a problem. Then, add that VC to an ongoing distribution list for future updates. This is another tactic that less than 1% of entrepreneurs utilize. If you get me on a distribution list of updates, you have the opportunity to grow my belief over time and address problem areas so I’ll re-engage. For example, if a key missing piece was customer adoption, an email that mentions landing a big customer might cause a VC to reply for an update. Even if it doesn’t pull a VC back to you, you never know when VCs are networking and your company is mentioned. If multiple VCs are aware of your latest company wins, there’s a higher likelihood they will compare notes on your opportunity. Likewise, a VC familiar with your progress might point customers, partners or talent your way.

I’ve seen plenty of other tips for approaching and attracting VCs, particularly as it relates to qualifying the right VCs. These tips are not a replacement for those; just communication tactics once you’ve decided who to approach. I hope they help…

UPDATE: In the comments, Sam highlighted another great resource on pitching VCs, put together by Mark over at GRP. I think it’s so useful, I wanted to highlight here — and throw some linklove to yet another VC who understands the power of in-stream advertising.


  • Sam says:


    Thanks – this is really useful. Did you also see this great series about raising venture capital – – well worth checking out if you get a chance.

  • VC Dan says:

    agreed Sam, I like the detail. It's already strong and as Mark continues to build out that page it will be an entrepreneur must-read.

  • Ecordia says:

    Dan, thank you for this. Of course I would add a couple of points.

    1) Before you seriously engage a VC, make sure they have money to invest. This should be the first question you ask, "At what stage of your current fund are you in and are you actively investing in our stage?" Most VCs are running low and are at the very late stages of funds. Might want to ask before you waste your time.

    2) You might want to ask for references from the VC. I know it sounds harsh but selecting the right VC is like selecting a partner.

    3) Another question to ask is the ratio of origination to syndication participation. Meaning how many deals do they originate versus how many do they co-invest in. If a lot of co-invest then might not be right for you.

    4) Look at the companies they have funded before. If they are all enterprise B2B deals then your new consumer app will have a hard slog.

    5) Ask the VC if they are currently fund raising for a new fund. Chances are that if the answer is yes, then they are out of the market for 12 – 18 months – since they have to go and raise money just like you.

    6) VCs like validation BEFORE you pitch. They want someone else to say this is worth their time. The more third party authority, the better. Trust me if Larry Page said this is the next big thing, you will get some attention.

    In general, spending time listening and asking questions BEFORE you pitch. A good VC will be more than happy to share his thoughts with you so that you don't waste your time or theirs.

  • VC Dan says:

    @ecordia: sorry your comment was stuck in moderation…these are great suggestions for all entrepreneurs.

  • Mike Schmitt says:

    Dan–This is an excellent post with great content as well as great comments. This is a "must-read" for all entrepreneurs. Also loved the comments by Mark in the GRP link. Readers should take a look at the brief Youtube clip (at that link) with Alec Baldwin from Glengarry Glen Ross–this will put an entrepreneur's "VC pitch" in perspective!

    —-Mike Schmitt, Editor Florida BioDatabase

  • Very well written article, you did a great job explaining what to do and how to do it. If you don’t mind, I would appreciate some feedback on the layout of this page and list of investment opportunities. Thank you for your time,

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