Feel entrepreneurial? Have the greatest TV/interweb production idea since the last greatest idea? Then you’re ready to play Meet the Investors. But are they ready to meet you?
by Jason Freedman
I remember when I first started fundraising for my first company, my investor network was pretty weak. Not only did I not know many investors, I also didn’t really know how to pitch them.
I‘d basically take any meeting I could with any investor at any time. I went to conferences, meet-ups, pitch competitions. Every investor was an opportunity for an elevator pitch. I was doing whatever I could, trying everything to succeed. I figured this it what it took. This was hustle.
It was also stupid.
One day, I met a prominent VC at a conference. I started my elevator pitch. But in a rare moment of candidness, he told me that he doesn’t go to conferences to meet new startups. He told me, “By the time they get here, they’re already picked over.”
Here I had thought this man with deep pockets of other people’s money was evaluating me and my pitch. But empirically he knew that he wasn’t going to find his next investment that way. He was there to build relationships with the most successful founders so that they would introduce them to startups they liked. I’d been wasting my time.
Investors don’t want to meet you. They wanted to be introduced to you.
It’s a huge difference. Another top tier VC once told me that out of the thousands of business pitches he receives in his office every year, his firm has never funded one that came in completely cold. In other words, the only way to get their investment was through an introduction.
It makes sense. The job of a venture capitalist is finding a needle in the haystack. And it’s just not functionally possible to do that by evaluating every single one. So investors rely on their network to do the first round of vetting.
This little insight should dramatically change how you raise money. Instead of trying to build a network of investors, you should be building a network of introducers. And not all introducers are created equal. Here’s a guide to help you.