You’ve had your idea, you’ve found your team and you’ve got your new business up and running. But now comes the hardest part – raising capital.
One of the biggest and most pressing needs for any startup is attracting investment, and with so many entrepreneurs in the market, it’s no easy task. Harder still is gaining investment from the tech startup mecca: Silicon Valley.
According to Tanya Soman, Venture Partner at Silicon Valley-based 500 Startups, it’s important to plan your approach from the beginning. Speaking at the Blast tech conference in Rome on Wednesday, she gave several tips to investors from the perspective of a venture capitalist.
Get a warm intro
Soman highlighted the importance of a warm intro to investors – and more importantly, from the right people. Taking the time to establish a relationship with someone with connections first, rather than jumping straight in and asking for an intro, is likely to prove invaluable. Further to that, be careful who you ask for the intro from – if it’s someone who has chosen not to invest themselves, other investors aren’t likely to be interested in an intro from that person.
Tailor your deck
When looking for investment, its important to have a pitch deck for every occasion, says Soman. Three separate decks should be appropriate: a visual-heavy ‘demo deck’ with short text; an ’email deck’ of medium size with added context; and an ‘in person’ deck which should still be short but with more detail.
What’s your USP?
According to Soman, it’s important to ask: what’s your secret sauce? What’s your story? She said, “Figuring out why your startup is interesting is hard – sometimes the founders themselves don’t know why. But if you ask enough people what they think of your business, what they say back is the most important thing to listen to”.
Think like a VC
Before any meeting, Soman recommends asking yourself the questions that a VC would ask themselves. Would I invest in this company? Why? This founder? Think about the size of the fund your VC is running, what stage your company is in and whether they would really be a good match.
In the meeting, ask them the right questions. Don’t just pitch – ask them what they want to hear, whether they have any particular concerns, and work out how you can alleviate them.
In terms of following up on the meeting, always ask them when is best. According to Soman, partner meetings are generally on Monday – meaning that following up on a Friday won’t be worth your time.
Tanya Soman is a venture partner at 500 StartUps, a venture capital firm based in San Francisco. The firm have committed $300 million in capital across its four main funds and 13 micro funds, and invested in 1,600 technology startups all over the world since it launched in 2010.