VC Minute – quick advice to help startup founders fundraise better
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What questions should you ask when you’re in either a partner meeting or that very first discussion? I think this is something that’s really important. Most founders are scared to ask questions.
And the truth of the matter is every fund operates differently, and it’s okay to ask these questions. In fact, if I’m in a meeting with just a partner, I might say, like, hey, can you tell me about your LPs, your limited partners? How do you find them? Where do they come from? That’s, that’s something that I would actually be interested in as a founder. I’d be interested in understanding the fund dynamics. I’m starting to get more information on how they work.
How do they make decisions? How does their IC work? Their investment committee work? And how do they decide on what are they’re going to fund or not going to fund? How has that changed over the years? Are there any companies that they can think of that match how I’m thinking about the world? Founders that are thinking about the world, doesn’t even have to be the same industry. Is that someone I should be introduced to?
A lot of founders have been told that they should be asking for introductions, but they don’t really understand why they should be asking introductions. I think that general curiosity will come off really well when founders ask questions, but you have to just continue to drive and just always learning, always being curious. That’s kind of my motto here as well, because I am just trying to learn about the world and learn about how some of these funds work.
All the funds in my company work very differently. HubSpot Ventures is very different than an Insight is very different than Tribe , is very different than Stage 2 Capital. And they all have different investment thesis and they’re really just want to make sure that they’re thinking about how your organization fits into that investment thesis.
And if it doesn’t, that’s okay, but you should know that up front because otherwise you’re most likely wasting your time. And sometimes funds and partners are a little bit afraid to say no, they’ll use one of the cliches like, “Hey, I really liked it. You’re just a little too early in traction, don’t have that million dollars in ARR that we’re looking for.”
And that’s a bunch of BS. We know that’s a bunch of BS, but if you’re okay and open and you’re vulnerable and asking questions, they’re going to create that relationship with you. And it’s going to be tough for them to potentially say no, but they’re going to give it to you straight.
I’ve pitched First Round Capital three times. I’ve gotten three no’s from Josh Koppelman. I’ve been three partner meetings and three no’s. But you know what the best thing about that process? Josh always has called me after the partner meeting. He’s always said, it’s always been the same partner, this partner, this is where they just couldn’t get their hands around this thing that you said, AJ. I’m like, I’ll try again next time. Fourth time’s a charm, right?
But that’s okay. You’re always learning from those processes. And the way you learn is to ask questions. And you’ll ultimately get a lot of partners and funds to say, “Huh, that’s interesting. I hadn’t thought about that.” And that’s what you want to do.
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