What’s the right way to interface with potential investors a couple of months prior to starting a funding round?
My thoughts on this have changed a bit over time, as the general pace of—and level of activity in—the startup world has begun to hyper-accelerate. It’s always a good idea to be able to approach someone with whom you’ve had at least a nodding relationship, because that immediately differentiates you from a pure, over-the-transom funding request, and you are much more likely to at least get an answer.
On the other hand, if I were to “get together occasionally” with every company that may eventually start a funding round, I would be the world’s most dysfunctional investor (and entrepreneur, and husband, and father, and human being.) Let’s say that there are 1,000 companies a year who pitch me somehow x 3 to take account of the ones that won’t eventually get to a pitch x 3 because ‘occasionally’ implies more than once. That would mean each year I’d be “getting together” with entrepreneurs 9,000 times…which, when divided into the 250 work days available, means that I would need to have 36 get-togethers every single day (hint: that won’t work)!
So, at this point I think the best approach is a compromise: by all means be actively involved in your local startup community. Go to the tech-meetups and the hackathons, attend startup conferences and other events where you will be able to engage with both entrepreneurs and potential investors. But then hold off on setting up a meeting until you are fully ready to pitch. That means having all of your ducks in order, your product in the market (or at least your prototype done), all (or at least the key people) your team together, your financial plan carefully thought through, your investor investor pitch finished, refined and rehearsed, and all of your materials pulled together in one place (such as a Gust investor relations site [shameless plug].)
The reason for this is that today, any time you talk to a VC the assumption is that you are pitching, and that is likely to be the way your approach is received. Therefore it will generally, I believe, be harder to overcome an initial negative reaction to a ‘not yet ready’ pitch, than it will be to have their first exposure to you be when you are all dressed up and ready to go.
I’m aware that this runs counter to the traditional wisdom of the venture world (and what I used to recommend myself), but I think that time, volume and pace are changing every day, and it’s important to adjust one’s strategy to the market as you find it, not as it was.
Comments are welcome from other investors!
*original post can be found on Quora @ http://www.quora.com/David-S-Rose/answers *
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