First they don't take cold calls. No e-mails either. The only way you can get your foot in the door and your start-up in front of a venture capital firm is to have a connection.
They need to hear about you—rather than hear from you.
No real surprises there. Those of us who live in the Triangle already know that the start-up culture is a big source of the energy and economy in Raleigh, Durham and Chapel Hill.
The real surprises do come, however, when you start trying to get venture funding to take your start-up to the next level. Unfortunately, there are virtually NO in-state options when it comes to raising that all-important A round cash.
First let me say, that I’ve been down this road previously. Before PRSONAS, I’ve been with three venture backed companies (all with exits) so I know what investors are looking for before they write the check.
And PRSONAS fits the bill (in my opinion). We spent 12 months bootstrapping our company before even considering raising venture funding. Our product is highly innovative (holograms + AI + analytics). We have strong IP. Our team is experienced and we have a good amount of the all-important "traction”—we generate product revenue, $350,000 in over the past 18 months. In March, PRSONAS logged sales of $65,000 and added high-profile clients: Pepsi, Procter & Gamble and the Seattle Mariners.
Armed with a strong, investable company profile and good market traction, I saw the Southeast Venture Conference as a great opportunity to generate interest from seed fund VCs.
To make the most of the two-day event, I started my homework weeks in advance.
Research. Research. Here are three things you MUST know before contacting a Venture Capital firm:
1. Investment Stage—Most VC firms focus on companies at a specific stage or level for their investments. “Seed” stage funds typically target early stage startups where “growth” funds target later stage companies raising $5M+. Private equity funding is typically for late stage companies with very strong and predictable EBITDA. If you’re a startup with only modest revenue you’d be completely wasting your time pursuing a meeting with a growth fund or private equity firm.
2. Theme—Many VC firms target specific technology sectors. Think “eCommerce”, “mobile”, “infrastructure”, “security". If you’re a mobile app startup, you’d be wasting your time trying to contact a VC firm that specializes in “enterprise software”.
3. Contact—It’s critical to identify the right person in the firm to contact. First, it’s important to talk directly with someone who has the word “partner” in his or her title. Remember, cold calls and emails do not work. LinkedIn can be your best friend when it comes to identifying potential contacts who can help you with introductions.
Back at the SE Venture Conference, I scheduled five 1-on-1 meetings with my short list of seed stage investors in addition to my eight-minute presentation to the group at large. I was able to meet several VCs on my target list by attending the sessions where they spoke.
Did all this research and pitching pay off? Yes. I now have a personal connection with several seed venture capital firms that are interested in what we do at PRSONAS. I put my company, my name and face on the radar; my foot in the door.
They will now take my e-mails and calls.
And I didn't have to travel to New York, DC or Silicon Valley to do it. The Southeast Venture Conference brought these investors to our turf.
But what about the money, you're asking? Did you leave the conference with a BIG check in hand?
Not yet. The VCs I met with want to see even more "traction".
So instead of hopping on I-85 and heading home for dinner after the event, I headed to Atlanta in search of more client revenue.
March was a great month for PRSONAS. Now, if we can just continue to grow in April, May, June, and beyond….