Over the last 2 months, I have had the opportunity of interacting with multiple VCs in the valley. If you ask any founder actively fund raising, they will say it’s the most stressful, soul searching exercise with many cycles of ups and downs. And they are right, it is. As frustrating as it is, it could be a great way to get better at so many different levels. All you need to do is listen carefully to every question and every point of feedback they give and get better at the following
- Investor deck
When you make an investor deck, you are obviously assuming that’s the best deck to explain your business plan. It’s important you think so because only then can you make a good presentation out of it. But, also keep in mind, you gotta improve it with every meeting. Include information that you gave a complete blank look for when some questions were asked.
- Domain and industry trends
You obviously know better than anyone else about your industry. That’s why you have founded this new business of yours. Right? Wrong! We don’t know the previous companies in the last 20 years that have come up in this space and have failed. The VCs know why because they have invested in this space before or companies similar to yours. They read monthly / quarterly reports from their investee companies that keeps them updated on industry trends. So, sometimes it’s good to keep your ears open. It’s useful information for you whether they invest in you or not. It’s gonna save you a lot of time not making the mistakes you probably would have made.
- Defining metrics that matter
This is obvious. VCs ask you for specific metrics like cohort analysis or WAU/MAU ratio, CAC, etc. If you dont have it already, make sure you have it in the next meeting. It’s not just useful for raising funds but also to grow your business week on week.
- Identifying parallels
Some VCs asked me what other startups in other industries are similar to ours. I wondered why they ask. The best that I can come up is because they want to know what other companies they have invested in is comparable to yours. So that, they can better assess where you are in the growth cycle and what metrics are essential. But, the most important thing is so that they know what challenges are you likely gonna face and if you have answers to mitigate that. So, it might be useful to know other startups/companies similar to your in other industries
- Greater trends and truths in the big financial system you can be part of
One VC once forwarded one deck that they use internally to understand larger trends in the investment industry. For example: Changes in human attitude towards technology or what large multi – billion dollar corporates would really pay for today. What are they missing, etc. They understand the shift that’s happening in Consumers and Businesses. Most times, we founders are focused on the smaller 2 year / 3 year goals. We focus on improving customer stickiness, improving design, adding features but sometimes we lose the larger picture. These meetings help in understanding that and if you do, puts you in the path of larger success.