So I’ve been diving into the First Search tool I mentioned last week and reading some great articles, some snippets of which I’d like to share here.
The first one is a synopsis of an interview First Round did with Kevin Ryan, an entrepreneurial powerhouse who has been the founder, or chairman, of companies like DoubleClick, Gilt, MongoDB, BusinessInsider, and Nomad Health. In total he’s raised a whopping $750 Million in venture capital.
The article is a quick read, and is chock-full of great advice. For example, this instruction on when to start the fundraising process:
Before anything else can happen, you have to make sure you can get VCs to the table. If you start reaching out to them when it’s time to raise, it’s already too late. “When I plan to be raising in six months, I’m already out there, proactively connecting with VCs, having coffees, making as many of them aware of my company as possible,” says Ryan. “The conversation is safer when I’m not raising money.”
In this preliminary phase, the goal is to secure early expression of interest — an “I’d love to hear about it when you’re ready” — from as many VCs as you can, ideally six to eight. “No one can say no to the meeting when you’re ready to raise, because you can lead with, ‘You told me five months ago you wanted to hear from me when I went out to raise. I’m out there now.’”
His advice to begin the hustle months in advance makes sense when you look at the statistics highlighted in the article:
In First Round’s recent State of Startups Survey of 869 venture-backed founders, we noted that over half said it took them 3 or more months to raise their last round, over a third said they raised less than they set out to, and nearly a quarter pitched 20+ firms.
Ryan’s advice delves deeper, and gets even more nuanced. For example, the order in which you meet VCs can have an impact:
When you’re scheduling pitches, always save the best firms for last. “I like to have one or two meetings with either VCs that might not be the ideal fit or angels or other people who can give me commentary on the idea and how I’m presenting it,” says Ryan. “Every time you go through and do a presentation for the first time — or even several times — you find out it’s not great.”
Each meeting will also make you more familiar with your industry’s special variety of groupthink. “You’ll see the same questions come up over and over again,” he says. “By meeting three or four, you will have drilled yourself so you have tight answers to those questions.”
But my favourite tip is the one that deals with the emotional component:
At the outset, you might need to fake the confidence that you can and will deliver. But with every presentation, it’ll become more natural. “Don’t lose sight of the fact that VCs are not here to do nonprofit work. They’re looking for returns,” he says.
“You basically start to believe your own bullshit after a while, and that’s a good thing.”
You can read here the full article Step-by-Step Fundraising Tactics from the NYC Legend Who Raised $750M.