Last week on TechCrunch With the disruption (recaps coming soon), I spent less time than usual in the Green Room where staff and speakers work backstage and wandered around the Moscone Center.
More than 10,000 people passed through the conference room over three days: I moderated three investor panels and Q&As, but I must have spoken with at least 30 early-stage founders. I wanted to learn more about what type of information they are looking for.
No one I met said they were looking for “thought leadership” or red-hot ideas: almost everyone wanted practical advice that would help them raise money, build, and scale.
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If you want to know what investors are looking for, how they want to be contacted and what they are likely to ask, keep reading.
Six out of seven venture capital funds I surveyed this month included their contact details, so getting in touch with a tech investor is the easy part. The hardest part is crafting a story about your startup so compelling that they will recognize the value of your idea and transfer you some money.
I can’t help you there. But if you want to know what early-stage investors are looking for, how they prefer to be approached, and what questions they’re likely to ask once you’re in the room, keep reading.
Don’t stop here: If you’re in a fundraising situation—or know someone who is—our How to Pitch for Me columns have the answers (and questions) you didn’t know you were looking for. Many thanks to everyone who participated this month:
- Maria PetronMain, BIVA Capital
- Carl AgeManaging partner, M13
- Raja Gawia partner, Enterprise era
- Anamitra BanerjeeManaging partner, Before capital
- Mukaya (Tai) PanicCIO and CEO, SCP 10X
- David Phelps, Founder, Chairman and CEO; Merlin Ventures and Merlin Cyber
- kavita gupta, Founder and General Partner, Delta Blockchain Fund
These answers have been edited for space and clarity.
Maria Petron, Director of Biva Capital
What types of opportunities are you looking for now?
Our strategy hasn’t really changed since we launched our first fund. We support founders and companies who are transforming industry for the betterment of people and planet. A big part of that is investing in decarbonising the industry, but at the same time we are thinking about how technological advances such as 3D printing, robotics and artificial intelligence will impact the industry.
We look to invest in companies that are reaching technical and commercial inflection points, reimagining what trillion-dollar industries, such as manufacturing, food and agriculture, energy and heavy industry, will look like in the future.
How would you prefer to be contacted: a cold email, a warm introduction, or some other method?
Warm introductions are always better because there is more context as well. I also like meeting people in person, so meeting at conferences or events is a good way to learn more not only about companies but also about the founders and teams behind them.
If you are comfortable doing so, please share your contact information.
maria@piva.vc
What made you say yes to the last company you invested in?
Our latest investment is led by an amazing founder with significant experience in the industry you are trying to disrupt. Not only does it have a very unique technology and a great team, but it clearly explained during the presentation what it had learned from previous attempts to solve this same problem, and why focusing on customer needs was fundamental to the success of this company.
We ended up deciding to lead this tour after having many conversations with clients that confirmed this to be true. If the product and solution is this good, you want to hear about it from real customers.
When is it too early to start looking for investors?
I love meeting companies early because it’s very poignant when the founders say, “This is what I told you I was going to do at this time, and this is exactly what I did,” when we reconnect again.
When you’re ready to start fundraising, you want to make sure you know how much capital you’ll need and what the milestones are. The days of waving around your next round size are over, and once you know that, the faster you’ll be able to strike up conversations with investors.
Besides product-market or revenue fit, what are three things a team should show you before you sign a term sheet?
A clear understanding of how much capital is needed to expand: What other sources of capital, besides venture dollars, will you look for?
A clear explanation of the risks the business they are building will face – do they believe there are operational, market or regulatory risks, and how are they thinking about mitigating them?
Clear communication of the company’s big vision – We invest in huge markets with big problems. What will this company look like in five, ten, or twenty years?
In September 2023, what are the most important questions founders should ask investors?
Having an investor as a board member means they will be a partner for the next five to ten years; You want to make sure you know how they work with founders when things are going well, but also when things aren’t going well. Good venture capitalists will be happy to introduce you to some of their portfolio founders so you can hear from them directly.
Also make sure you understand the fund’s reserves strategy – how much capital is allocated to follow-on investments, do they typically pursue them, and how do they evaluate follow-on opportunities?
Can you describe one traditional method of promotion that is no longer effective but is still common practice?
Give a full presentation and ask investors to save their questions until the end. As a founder, you want to make sure you have an engaged group of investors listening to your pitch. Too many high-quality questions may mess up the flow of your slides, but they will ensure that the VCs understand your business, and it will help you understand how they think and what they are looking for.
Are you ready to review your presentation notes or would you prefer the full set?
Short notes often lack real metrics and information to understand why this company is different. If you are sending early, I find that sending full decks is a better strategy as the VCs will have enough time to review and show up prepared for questions.
What are you reading/watching/listening to right now?
Although I still love VC podcasts, I realized I needed a little break from my 100% VC content. I alternate between Nuestra Parte de Noche (Our Share of the Night), a psychological thriller set in Argentina in the 1970s and 1980s, and rereading Matthew Walker’s Why We Sleep, which I highly recommend.
Carl Alomar, Managing Partner, M13
What types of opportunities are you looking for now?
I will first filter opportunities by stage and category. From a phase-in perspective, although seed investments can be fruitful and I have made a number of such investments, I prefer to look for companies that are closer to their Series A, with approved product-market fit and some early traction in hand.
My general focus categories tend to be FinTech, Web3, Productivity Tools/SaaS Tools, AI, and Infrastructure. Having said that, I’m also fascinated by companies outside of this space that are generally disrupting legacy categories and markets although I generally stay away from true brick-and-mortar companies or physical consumer product offerings.
How would you prefer to be contacted: a cold email, a warm introduction, or some other method?
Let me apologize in advance: As an investor, I receive a lot of incoming emails, so sometimes it is difficult to respond to all messages in a timely manner. The best way to connect with me or any investor is through your network with a warm introduction.
If there is a way to provide some sort of introduction or reference point, this makes it easier for an investor to filter you out and is likely to lead to a much more efficient response. If a warm introduction isn’t an option, feel free to email directly, as LinkedIn has a lot of noise and doesn’t get noticed very often.
If you are comfortable doing so, please share your contact information.
You can always email me at karl@m13.co
What made you say yes to the last company you invested in?
The biggest driver of decisions for me overall will be the founders and my belief that they can truly build a great business. The last company I invested in had an incredibly strong founder/CEO who was clearly able to break through walls and make things happen within a company with clear product-market fit and a category that demonstrated strong potential demand.
However, the key was that the founder had a unique ability to secure incredibly favorable terms on all the partnerships he brought to the table, and I could really see him building the business to very big results. Since the investment, the company has already doubled in size and become one of the leaders in our portfolio.
When is it too early to start looking for investors?
It’s never too early to look for investors; However, investors come in all shapes and sizes. Although angels can back you with an idea, it takes more to access institutional capital.
For an initial investment, as a general rule, I would suggest that you have a fully detailed plan and economic model with a minimum viable backtest to verify that there is market interest in what you are offering.
However, for Series A, you need more validation: Ideally, you should have demonstrated product-market fit and demonstrated sales movements that can be replicated and scaled within a reasonable cost of customer acquisition. Ultimately, in all scenarios, you should come with a clear vision, a good understanding of your market and the ability to scale your business.
Besides product-market or revenue fit, what are three things a team should show you before you sign a term sheet?
There are many variables in evaluating each deal that are very unique, but if I were to narrow it down to three basic concepts, here is where I would land:
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Business Economics: We need to see that a business can expand in a healthy way and that the economics make sense.
Meaningful Target Audience: The business objective must allow for significant growth and as a result strong potential value to the organization in the long term.
Founders/Strong Leadership: Most importantly, we will assess the quality of the leaders themselves and evaluate their ability to inspire a vision and act effectively.
In September 2023, what are the most important questions founders should ask investors?
This is a great and very important question.