VC Minute – quick advice to help startup founders fundraise better.
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There’s a famous startup maxim: “lines not dots.” Mark Suster wrote this on his blog in November of 2010, and it’s as true today as it was a dozen years ago. When you and I meet, I have one data point. A dot. The next time we meet. I get an update. I have two dots and I can now draw a line.
Mark’s post, which I’ll link in the show notes, plots this on a simple graph with performance over time. The more dots. The more confident I feel in the direction of the line.
As you meet with potential investors, your goal with the first meeting isn’t to close the deal. It’s for both you and the investor to get data points on each other. This is a really important point so I’m going to reiterate it. The goal in an initial meeting with an investor isn’t to get an investment, it’s to start building your relationship with them.
We’ve already talked about asking for good next steps. And now that you each have one data point on each other, you can continue to put your data points on their chart through a regular investor update. Keep it simple, but also keep it consistent.
I find weekly a bit much unless you’re coming into the final stages of your funding round and you’ve got a lot moving. Bi-weekly works great. Monthly is fine too. The email should be short and straightforward. Start with your intro blurb, assume the investor already forgot what you do. Then have sections for Good, Bad, Thank You’s and an Ask.
The last two are great hacks. The Thank Yous are a great way, not only to publicly acknowledge folks that are helping you, but it’s also a little bit of gamification. I can’t help, but read those Thank you’s and think, “oh man, if I respond to the Asks in this email, well, I get a Thank You in the next email?” And then I’m actually really incentivized to respond to the Asks. It’s also the right thing to do on both sides.
If you’re sending regular email updates. A potential investor has multiple dots to start drawing a line. When you have your next meeting, then they can confidently draw that line up and in a positive direction.
Even better, you may not get an investment from that fund in this round, but with the lengthening of the Seed Phase, you may be back around for a Seed 2 and now they’ve got a lot of dots and they can draw great solid line about how wonderful your business is.
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