That’s why we’ve put together 5 Unwritten Rules of Raising Venture Capital to help make this intimidating journey a little easier to handle.
1) Take “No’s” Lightly
Many early stage entrepreneurs ask for explanations on why an investor passed on the deal. If an investor cannot understand exactly what you are doing, listen to that feedback as you need to work on telling your story. Besides that, do not get caught up in the feedback. At the earliest stages, find investors that agree with your vision. Do not worry too much about the ones that do not get it.
2) No Mass Emails to Investors
Do not send mass emails to investors. Do the work required to find investors that will be good partners for your company. A mass email signals to investors a lack of thought behind the investors founders want as part of their team. In your email, indicate why the fund would be a good partner for your company. Show you have done the research.
3) Don’t Lie
Eventually the investor will find out. It creates distrust that is hard to repair.
4) Know Your Market
Founders should be market experts. Many times companies will say they are the first solution out there for a problem. It is almost always a lie. Among other things, not knowing the competition signals a founder may have started the company because they liked the idea of starting a company, and not actually to fit a market need.
5) Ask for References
Founders should ask to speak to a fund’s portfolio. Speaking with a fund’s portfolio will allow for a founder to know what the relationship with the fund will look like going forward.
Your investor will become an integral partner to your venture going forward, so you want to be sure you are approaching this process in the right way. If you aren’t totally sure what role your investor should play in your startup, you can check out a recent webinar we hosted that dives into just that.