VC Minute – quick advice to help startup founders fundraise better.
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First up, working within an investor’s system means getting through their process. In an ideal world, every investor has a clearly defined process for making an investment decision.
At SpringTime for example, we do a 30-minute call. A 1-hour call and then a final 1-hour call. In between each we’re doing different levels of due diligence escalating towards the very end. But you know where you stand because that’s our process and we can tell you where you are in it.
But not every fund can articulate their process, or maybe even wants to.
Ask an investor what their next step is and you’re going to get some form of, “uh, well, you know, we gotta get back to our team and talk about it and dance, dance, dance, dance, dance, dance.”
Here’s where you need to start digging in and asking clarifying questions about their process. Specific questions like, who else do I need to meet from your team? What materials do you need from me right now? What will you need from me in the future? What does the meeting with the investment committee entail? What is between here and meeting with the investment committee?
You can also play back what you heard and follow up with specific questions such as: Okay, it sounds like the next step is to review it with your teammate. After you review it, does it make sense to follow up with a 30 minute meeting or a one hour meeting? Should I follow up with you on Friday or next Monday? Which do you prefer? How do you take next steps once you’ve reviewed it with your partner?
You can also ask hard questions like. What did you hear today that has you concerned? Or is there anything that you heard today that would preclude you from making an investment?
Don’t be afraid to dig in and ask these questions. Make sure you leave time for this at the end, or start with this at the beginning, do it in the middle, just to make sure that you ask clarifying questions about their process.
You need to know what their investment process is because you need to know how you can get them to take action. To take that next step with you.
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