How to Approach a VC on LinkedIn
by Rafael Aldon and Yasanhalari Kharkongor
Approaching a VC can seem a little daunting at first, so here is our quick primer for entrepreneurs who are setting out to raise funds for a start-up business.
LinkedIn, Yes LinkedIn
Now owned by Microsoft, LinkedIn is a treasure-trove for business opportunities and a platform to find investors. It boasts over 467 million members worldwide according to the stats from Statistica. It is the number one preferred channel for business connections. Simply put- it is a reservoir of potential investor contacts.
VCs are typically inundated with daily requests from start-up founders on LinkedIn, so quickly establishing trust and credibility is crucial when approaching them. A good profile goes a long way towards bringing you closer to your goal so make sure you have all the hygiene factors in place. For example, a professional looking headshot as a profile picture rather than your company logo, it sounds obvious but many people fail at this first simple hurdle.
Avoid using boastful statements in your profile that you can’t back up with evidence as this will send alarm bells ringing. You want to appear confident rather than arrogant. Ask for some feedback on your profile from trusted contacts first before you go crazy with the connect button. It will pay off!
Purpose of pitching
First things first, remember the purpose of pitching your business to a VC is not just to get some M-O-N-E-Y. VC’s are of course looking for great businesses that will deliver exceptional returns but the process isn’t transactional. Professional investors build long-term relationships with Founders so, enter with the mindset of creating a fruitful journey together and a mutually beneficial partnership. Marriage is not something that should be entered into lightly and you will be (effectively) married to your investor, so choose wisely!
Look for connections
Before you contact any VC, check if you have any second- or third-degree connections who work at VC firms and request them if they can introduce you to the VC you want to approach as this will get you to the next level, a lot quicker. An introduction through a mutual contact can certainly launch you to a preferred position on the email mud pile.
And if you’re not connected at all, don’t fret. You can still initiate a contact.
Have your Investor Facing Deck ready…
Things can sometimes move quickly, so make sure you have the docs ready to go that an investor will expect to see in order to understand your business:
- One page teaser pdf– a high-level overview of the business outlining market opportunity and how you are uniquely positioned to take advantage of this. Ensure you outline how much you are raising and what you need it for and think about how you can get a VC excited to know more. VC’s are often visual orientated so think about how you can avoid large amounts of text and use charts etc effectively.
- Investor Slide Deck – Approx 10-20 slides that provide all the details on your team, value proposition, business model, product secret-sauce and projected returns etc. There are some great examples out there so do some research and ensure your deck is polished.
- Financial Projections – This excel document will be how you arrived at the revenue and profit projections in the Investor Deck and should show past performance by year along with 3-5 years of the forecast. A VC will likely want to dive into these numbers to test your assumptions and in doing so understand how realistic your forecast is.
HOLD YOUR FIRE– Do not bombard a VC with all these docs at once. The focus is on getting face time to build rapport but having these documents ready to go will prevent you having to stall while you rush to make them.
Know Your Target
Study the VC firm you are trying to reach and try to find out who the ‘right’ person you need to be in touch with.
Most VCs are active on LinkedIn, sharing their stories and insights so, take the time to scour their profiles, posts and portfolio companies to understand their investment approach. Since most VCs will outline their areas of investment interest like Fintech, Telecom, Retail, Tech etc, and the stage they invest (Seed, Series A etc) this helps in sifting through the options.
Every VC will have their own approach and investment thesis. Make sure you decide whether your pitch is data driven or concept focused. If it’s a data pitch (which means you have traction, customers, revenue etc) you’ll need to highlight the ‘good data’ and if it’s a concept one, be sure to highlight your ‘vision’ and how you plan to achieve it.
This wealth of information gives you the privileged access to knowledge that will enable you to engage with the right VC. Use this info wisely because we only get one chance to make a first impression.
Don’t be afraid to say HELLO
ALWAYS send a personalised connection request. A VC is likely to reject you if you don’t.
Put in that extra effort to frame a personalised message, because when someone is swamped with requests every day, it is very easy to bypass messages that aren’t focused.
Short and sweet
Never think for one second that longer is better. Remember that you’re not going to collect your venture-capital funding from your first message but it may land you a meeting or call. Hence, your first introductory message should be short but compelling enough to make way for the second stage. Once your connection is accepted a quick thank you and a well-worded intro with your one-page teaser doc should be enough.
Don’t be shy to follow-up
If your messages are met with radio silence, be sure that we’ve had our nose to the grindstone.
Follow-up if you haven’t received any response but do not send a follow-up email every day. According to HubSpot, here are some suggested time frames for follow up emails based on various use cases:
Follow up on a meeting request or after no response regarding a job offer.
Every 3 Months
To catch up with a connection.
Just as Rome wasn’t built in a day, so are partnerships. Build relationships with VCs even if they didn’t invest. Don’t be disheartened instead, learn from every interaction.
Nurture the relationship and stay on their radar as it can potentially lead to something else like a referral to other potential investors because, remember, VCs have significant networks of influential industry leaders.
We, at VenturesOne, are always keen to hear from you and if there are specific topics you would like us to cover, please feel free to connect with us. If you find this useful, please share!