My awkward VC fundraising experience taught me 7 crucial lessons

Like many startup founders, I was excited to hit the fundraising trail and begin pitching venture capitalists my seedling business after many months of late nights, early mornings, setbacks, breakthroughs, research, and planning.

As any budding entrepreneur should, I spent countless hours researching every detail of how to raise investment.

I read every book, blog, and article I could find, as well as watching YouTube advice videos from the likes of Y Combinator and other VC firms until I could pretty much recite the script.

After absorbing all this knowledge, one thing was clear: it wasn’t going to be easy. Especially for a solo founder that wasn’t an ex-senior employee at Google or Dropbox. So I was prepared for the rejection, but decided to soldier on.

Beginning the journey

In addition to all the articles and books I read, I held a number of preconceptions about VCs and what it’s like to raise money:

• VC’s get thousands of applications a week
• They want to ‘get’ the problem and solution, and ‘love’ the team
• The market needs to be big
• Every VC firm has its own sector preferences
• Warm introductions are best

So there I was. Investment-ready with pitch deck, financials, and product spec’ ready to go — along with an extensive list of well-thought-out VC firms on my target list.

Out of thousands of applicants, how was mine going to stand out? I was confident in my pitch, and in my business, but surely these guys get some sort of ‘startup fatigue’ which desensitizes them to a great opportunity?

In fact, we know they do! VCs regularly write about how they rejected and missed out on incredible startups that go on to become billion-dollar companies.

As I persevered through the process of contacting VCs, it was clear there was a disparity in how firms want to be approached. Some insist on completing a soulless online form on their website, where you feel as though all your hard work is going straight into some bottomless pit of an unmonitored inbox.

Others kindly provide you with an email address, whilst some will only engage via mutual contact as a warm introduction.

I started initially with the online forms, as I knew these would most likely take the longest for any kind of response (I was right).

I then applied some business development thinking to the process and thought of it as a sales process. So I began to follow this approach:

1. The official approach — Complete the online form and submit the pitch deck.
2. The direct approach — Connect with a specific investor at the firm on LinkedIn and send them a short and punchy message directly. Or better yet, email them directly if you can hunt down their address.
3. The back door approach — Get a warm introduction.

From my experience in business development, I knew that warm introductions were always best. But as someone who doesn’t know any VCs or acquaintances of VCs, how would I get my ‘in’? Who can I approach that has regular contact with investors and would be happy to make an introduction?

Then it clicked. Lawyers and accountants!

I spoke to six different lawyers and six different accountants, each time presenting myself as a potential future client, looking for representation as I raise funds, which I was. A small handful were happy to recommend me to VCs they knew and thought would be interested.

And this worked! This ‘backdoor approach’ is how I got my first few introductions to VCs which resulted in Zoom calls.

From start to finish, this whole endeavor must have taken about two to four weeks until I had a meeting booked. In that time I had contacted dozens of VC firms in the ways mentioned previously.

The ‘official approach’ resulted in a lot of silence, a couple of rejection emails, and one ‘we love it, but we work with a close competitor.’ That particular response, by the way, came three months later!

The first actual meeting with a VC…

The day of the first Zoom meeting had arrived. I felt prepared, but had a sleepless night beforehand and was very nervous. I had rehearsed my pitch countless times and knew it was strong from the critical feedback I had received from many different mentors and advisors over the past few weeks.

In the end, the meeting was… awkward. If I were to describe my experience of the first meeting with a VC, having just come off the call, it would be this:

• She seemed very rushed, a strict 30 minutes with no clear structure or opportunity to screen-share and walk her through my deck.
• She was checking her emails and seemed distracted throughout, which put me off.
• My pitch deck contained a suggestion that I would be open to exiting in five to seven years, as I thought VCs wanted a capital event — I mean, it’s how they make their money, right? Apparently not. She referred to it as a “turn off.”
• Right upfront, the VC stated that she liked the concept, but thought the market was too small.
• In closing, she stated she thought the market was almost too big. I’m not sure how well she was listening.
• The bottom line; she wanted to see a team and more traction. An angel round first may be a better option.

Be under no illusions, hearing this after all your relentless work as a founder can be soul-destroying. You know you shouldn’t take it personally, but you do.

I do honestly believe though, in hindsight, that every founder needs some sort of rejection and critique to help develop the resilience you need and ultimately help you become better.

It’s all fair and well being attracted by the allure of raising a big institutional round early on in your startup’s lifecycle, but having now experienced the reality of fundraising, and pitching my seedling company to half a dozen or so investors, there are a few things you might want to consider before pitching your own startup.

So here are the seven key lessons I learned which I hope will make your own journey much smoother.

Startup founders heed this advice!

VCs say they’re open to being approached at any time in your startup’s lifecycle, but that’s quite often not the case. This is VC speak for; we want an A+ team in place, and we want traction — but can’t specify what traction looks like — then you can approach us.

Be prepared for the first Zoom or meeting to be brief. You will be challenged, and it will seem as though they’re not listening (although some actually do).

Don’t waffle. Drive home the problem, and your unique, game-changing solution. Why are you going to solve this problem better than anyone else?

VCs want a big market, but not too big. Some of the tier one firms like to talk about ‘creating your own market.’ Of course that’s absolute gold, but easier said than done when trying to pitch investors as a first-time founder. Still, you need to know your market and users really well.

Warm introductions are definitely the most effective, if you can get them.

Fundraising is a full-time requirement to do it effectively. Be prepared for the huge time commitment and a lot of rejection. It happens to everyone!

I’m not going to say don’t take it personally, because I did, and you will too! But get over it fast. Learn, improve, and move forward.

And finally, a little bonus lesson, raising a VC round may not actually be right for you. It may seem like the most attractive option, but for some founders — like me — raising an angel round or finding an experienced co-founder who can help you bootstrap an extra year to prove traction may be a better alternative.

Good luck!