What to expect from VC meetings? Startups and growth-oriented companies looking for investment and funds need to get in touch with angel investors and venture capitalists.
Starting from a cold email to a pitch deck presentation, your contact with the venture capitalist is very critical at all points.
From one meeting to another, you should have a goal of getting the most out of each meeting. However, being a new entrepreneur or startup business founder, you might be new to the concept of venture capital meetings.
As a first-timer, you must actively search for relevant information about such meetings. You would also want to gain an insight into what to expect from them.
You ask successful entrepreneurs, business mentors, professional coaches, and even venture capitalists themselves.
How Does it All Start?
You have worked hard and thoroughly. With innumerable pitches and several networking efforts, you have managed to get yourself introduced to a VC. Getting their attention was not simple.
You have shared the necessary information with the VC and provided them a copy of your initial investment pitch deck. They have a brief understanding of your amazing new idea and business concept.
You deserve a pat on the back for sure, but what’s next?
Days pass and sometimes even weeks. You wait anxiously, and one fine day, you get a communique. Or a call from the VC firm or his assistant to schedule a meeting.
Time for rejoicing and excitement. But then the reality starts the process of intimidation. Fear of the unknown kicks in. Your brain is confused. And you ask yourself, what do the VC expect from me and what should I expect from them?
This is where we can help you.
This article brings together some of the best tips and guidelines on what to expect from VC meetings.
Basic Things to Remember
Venture capitalists are professionals in their field. They are specialized individuals looking for attractive and profitable business ideas requiring investment.
Being proficient and experienced in the field of investment, they have already chalked out a checklist. They have likely identified the basic criteria for every entrepreneur that approaches them.
These criteria guidelines are often part of their investment or partnership contract.
The basic points may include things like
- Sector or Field of Interest (financial, technology, software, etc.)
- Business Life Cycle Stage ( Seed money or saling)
- Geographic Location (Local operations, regional or international)
There can also be other vital characteristics that they might have pre-listed as a priority for their investment projects.
VC meetings are not limited to a given number. They may or may not schedule a series of meetings with different agendas for all.
Are you able to satisfy their requests and fulfill their criteria? Then you are good to go for the next meeting.
These meetings may have specific areas of focus like business analysis, due diligence and risk assessment, or legal concern. Or any other area of interest.
The main purpose is to systematically and meticulously assess the investment prospect and decide whether it is worth considering and approving for a VC investment.
Keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
As an entrepreneur, you and any other co-founders or team members should arrive at the VC meeting well prepared for all types of questions and information requests.
Do not take it as just another investment pitch. This is actually a formal way of analyzing your investment request without more prolonged discussions.
Presenting the most lucrative and realistic picture of your startup or business idea with clarity and concision is what the VC is looking for. The entrepreneur should be able to provide information about critical areas including things like:
- What problem do you plan to solve?
- What is your proposition or solution?
- Is your proposition unique or competitive?
- Is there a big market opportunity or demand for your offering?
- How big is your prospective target market?
These can be some of the basic essentials that every entrepreneur should cover in the first VC meeting.
If you are taking along co-founders or team members, make sure that all of you are on the same page. Your information should be exactly the same.
Any contradiction in your business proposal and basics can raise unnecessary questions and concerns about your investment proposal. Make sure to avoid such concerns when understanding what to expect from VC meetings.
About the Team
Meetings with entrepreneurs and founders might be followed by meetings with team members or on your premises
This means that the VC will be interested to check out the capabilities and expertise of the functional managers or key appointment holders in your prospective business.
Interviewing and conversing with them will be an effort on part of the VC to assess the management team’s strength and abilities. If they do not hold direct one-to-one meetings, they may ask questions about the team members from the founders.
Things that they look for in individuals include dynamism, motivation, expertise, practical experiences, and the ability to synergize with other team members.
Questions that pertain to the management team may include things like:
- Is your core team already decided upon?
- If yes, what are their professional credentials?
- Are there any HR gaps that require specific hiring of experts?
- Does your business plan require the unique capabilities of a team for execution?
- Are there any specific professionals needed to complete the next startup milestones?
These and many more similar questions might be asked in a recurring or one VC meeting.
The key is to ensure that your answers satisfy the VC and he or she is compelled to believe that the investment is in safe and the most capable hands. As well as to make sure you understand the gaps you need to fill or to identify where they can bring value.
About the Market
Familiarization with the basics of the prospective business opportunity is very important for every VC. Understanding the details of the business operations in-house and outside is key for making an effective investment decision.
One of the key topics of interest is the addressable market or targeted potential customers of the startup venture. Questions that a VC can ask during meetings may include things like:
- What is the targeted market?
- Is there existing market segmentation in the industry?
- What is the share of competitors?
- What is the size of the potential market?
- Do you know what is the growth potential of this segment?
- What are your business goals for future expansion?
Try to balance the grand optimism of your big vision, with being realistic about what it is going to take to get there.
Any type of data, information, or graphical facts that you mention should have a clear reliable reference and source. Having these details in hand is an essential part of knowing what to expect from VC meetings.
About Your Business Proposition
No VC meeting can be complete without discussion and questions on your business idea. The problem that you plan to address and the proposed solution will be discussed in significant detail by the VC.
Key questions that can be highlighted in your meetings will include things like:
- Is your product or service unique?
- If yes, how?
- How will you differentiate your offering from the existing competitors?
- Why would the potential customers be interested in your offering?
- Does your product or service have a manufacturing or development timeline?
- Are there any major milestones you plan to achieve?
- Will your business proposition evolve with time?
- Are there any modifications or additions planned?
The most effective and comprehensive way to address these questions is to provide the VC a demonstration of a prototype, your competitive analysis, and feedback compiled from engaging with customers.
About the Competitors
No venture capitalist assessment can be complete without analyzing the various aspects of competition for a given startup.
As an entrepreneur with an idea, you must have thoroughly researched every inch of the industry and shuffled through the history of your concept. With so many great minds working out there, you must not think of your idea as novel or unique without confirmation.
It will only embarrass you if you are wrong. Provide the real picture of your competitive landscape with clarity and deep insight.
When there is competition, use them to position your venture as the best to bet on far an investment. Questions that you need to focus on may include:
- What is your competitive advantage?
- Are there any barriers to entry?
- What is the stage of the market?
- What are the strengths of your competitors?
- Market share of each major competitor?
- What is your competitive strategy? (Pricing, product, promotion, etc.)
About the Marketing
You might have a great product or service, but how do you plan to market and sell it? That is a critical factor for success.
No offering can be complete without a customer. A VC investor wants an understanding of your marketing plans and customer acquisition strategies.
Often to be sure you know what you are doing, and understand the challenges. Prepare to answer these questions when figuring out what to expect from VC meetings.
Here are a few questions that might make sense in this regard:
- How will you market your solution?
- What will be your marketing plan, digital strategy, sales targets, PR goals, and other similar objectives?
- What will be your branding strategy?
- Do you know what advertising techniques you’ll follow?
- What will be your business model?
You must remember that marketing is a vast topic and it is dynamic. The various aspects of marketing are constantly changing with time. So, keep your marketing plans and information updated as much as possible.
Even as you’re preparing for the VC meeting, one of the first steps is to understand how venture capital works. If you’re not quite sure how your investors can assist your startup, check out this video I have put together explaining the process in detail.
It’s all about the money and for the money. Venture Capital meetings are full of discussions and deliberations about finances.
Key areas of financial focus for most VCs in the professional world include:
Future Expectations for the VC
This is a key consideration for all venture capitalists. What to expect about their position in the future of this business. Things they would be interested to find out may include:
- Exit Strategy plans
- IPOs and M&As options
- Exit point timeframe
- Return on investment projections
Having clear answers to the above concerns will reflect your strong vision and long-term business commitment. It will highlight your grasp on the industry affairs and the game of startups, and provide compelling reasons for the VC to invest in your startup.
You must have clarity about things like
- Required funding amount
- Pre-money valuations
- Investment rounds needed
- Existing investor details
- Major funding milestones
- FInancial runway
Last but not the least, do not forget to bring along a detailed analysis of your current and future financial projections.
You must be able to provide details about things like
- Financial statements
- Debt and equity statements
- Capitalization tables
- Stock status
- Future projections
The VC should be compelled to believe that you have a strong understanding and control over the financial aspects of the proposed business proposition to ensure future success and profitability.
Points to Remember
Venture Capitalists are looking for profitable opportunities to invest their money into. Keep this in mind when you’re preparing for what to expect from VC meetings.
As an entrepreneur, you must highlight the existing and future risks of your business prospect to provide a good foundation for their risk assessment.
It is also important to keep in mind the legal issues of intellectual property, patents, trademarks, copyrights, trade secrets, and domain names.
Be sure to define the uniqueness and authenticity of the business concept. As well as its financial strengths.
Come prepared with this information for VC meetings.
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