There’s a galaxy of talented and/or well-connected startup founders out there, but few have any prior fundraising experience, which levels the playing field by an inch or two. Everybody loves a go-getter, but in many communities, asking strangers for money is still considered a sign of poor character, not characteristic of an entrepreneurial mindset.
But the rules are different in startup-land: although there are basic best practices for putting together a pitch deck or term sheet, there are no hard rules for approaching potential investors. For some, a LinkedIn DM may be an appropriate way to get their attention, but others may filter notes from unknown senders into their spam folder. Likewise, some investors may ask to review your deck in detail; others may prefer a probing one-on-one conversation.
Telling a story clearly and succinctly is table stakes, but so many founders miss this step. Sarah Kunst, Cleo Capital
Even after doing due diligence, it’s still hard to determine exactly what kinds of deals an investor is looking for at the moment. To learn more about where top VCs are searching for opportunities, and solicit their advice for entrepreneurs who want to attract positive attention, I asked the following investors to share their thoughts:
Editor’s note: The answers have been edited for space and clarity.
Christine Choi, partner, M13
What kind of opportunities are you looking for in Q1 2022?
Everyone at M13 is super passionate about consumer behavior, and we back founders building technology that powers the future of commerce, money, work and health. We are following the effects of web3 or blockchain-enabled technology across each of these verticals. M13 invests in seed to Series A/B, so we work with founders who are pre-ideation as well as with those with strong product-market fit. Examples of companies within our four investment areas are here.
Tell us how you’d like to be approached by a founder with their initial pitch.
Diversity, inclusion and access are important to us and for the industry to succeed, so we like to meet founders beyond our own affinity networks. We speak at panels to meet promising entrepreneurs and also welcome cold emails. In fact, a metaverse founder recently DMed me on LinkedIn because she is eager to meet investors who understand consumers.
That brings up the importance of research. When a founder pitches us DTC, we know they haven’t done their homework about our evolved investment thesis. Content about our latest investments and insights on nascent markets is our way to be transparent with our community about ideas that matter and how we spend our time.
What’s one piece of advice that can help a first-time founder stand out from the crowd?
When we get to know founding teams, we ask ourselves the following three questions:
Why this team?
Why this product/service?