This is part one of the series on getting your foot in the door with Venture Capital firms. In this article, we focus on the different kinds of introducers you may encounter, ranked based on likeliness of getting that golden intro.
Not all introductions are made equal. There is a pecking order, so be aware of whom are the best people to get intros from. We will go through each one of these sequentially.
1. Limited partners of the fund
These are “Golden Tickets”; intros from them pretty much guarantee a meeting. VCs have bosses; they are their investors. They are called LPs. If you know them, contact them.
2. Founders that exited, are a big deal, and the VC made money with
All VCs will proactively go after introductions that have come from a founder who made their investors’ money. Founders who have made money for both themselves and their investors are deemed to have an idea of what the next good stock will be. Furthermore, VCs will want to reinvest in these founders. If they don’t treat them well (such as taking intros) they might not be able to give them more money.
3. Founders the VC wants to invest in
Next, are founders that VCs hope to make money from. If you get an introduction from them, the VC will not necessarily meet with you but they will at least respond to emails more politely than usual.
4. People they respect
Investors will at least scan an email from anyone who’s famous, has pull, or is kind of a big deal. CEOs of big companies should know what is required to make a company work, so if they think your company is cool, VCs will surely have a look.
5. Portfolio company CEOs
This is possibly the best place for you to go fishing. VCs have 5 to 30 companies and legacy ones too, so that means in aggregate there are a lot of touch points to a partner at a VC for you to hit up. You may be able to ask the VP or marketing or sales (who will get far less requests) for an intro rather than just the CEO/founder. VCs will check out these second-rung intros but may be prudent depending on the performance of the company and their opinion of the exec who’s making the intro.
To focus on founders, there are two categories:
Famous founders: Realistically, this isn’t the best category to aim for.
Not-yet-famous founders: For pretty much everyone else, you can take a shot at making acquaintances with them. The best ones to target are the ones that will have commonality, either because your startups are in a similar area or you are both in the same Scala meetup group, etc.
Don’t bother pinging founders who are too high-status compared to you presently. You can only go up two points. If you are a 3, an 8 is beyond your reach. Generally, founders +2 points are responsive unless you have strong commonalities. Be aware that usually only one founder has the relationship with investors— usually the CEO. Find and get the intros from that person at a portfolio company.
6. Investors they made money with and are cooler than them
There is always a pecking order. Lower level VCs need to earn cred. They want to look good for “cooler” VCs than them and will suck up a bit. Why would a cooler VC take an intro from a lower-level VC?
Sector focus: You are early-stage and focused on, say, blockchain and the big VC doesn’t know the field well. The lower-level micro VC may be a subject matter expert.
Stage: If you as a growth-stage investor to a seed stage investor, that is cool. Bonus points if the growth investor is making the intro since they would like to invest in you in a year or two.
Lead: The introducing VCs are not leaders, they are followers. They introduce you to the lead investor under the proviso that they intend being a follower. This is better if they explicitly state their intent here. The implied meaning here is that they worked together on deals in the past and made money and would like to continue that relationship.
Understand that if the motivation for this intro is not clear, it may end up working against you. It raises too many questions, like “if this company is so good why are they giving it up to someone else?” Be careful with this source of introduction.
7. Investors they are trying to do more deals with
This is very similar to the previous point. They may well be friends, but again, why is an investor making the introduction?
8. Investors they are investing with (unfortunately)
Startups fail, right? Depending on the stage and the sector, investors will inevitably invest together. As long as everyone worked well together, investors may do so again. However, if they had a bad experience, they might not. They may even question the other investor’s ability to evaluate a good deal.
9. Cold emails or LinkedIn/InMail
This is not recommended, as 1) Your e-mail may be lost in a flood of others and you could ruin your chances at another potentially warm intro to the VC, and 2) Many do not check their InMail.
10. Existing investors in your company
This is the random one on the list as it assumes you are already funded. This can go one of two ways:
You are a great deal and the VC has good intentions and is known to be a good guy: Your investor is known to pick great companies and not to be indiscriminate of who they put forward to other investors. So, all will be well.
If your investor is known to promote any company regardless of the quality to every investor, since they are desperate for their companies not to be losers, it doesn’t take long for other investors to notice. Investors remember crappy introductions. You might be better off reaching out yourself.
11. Everyone else
There are other categories of people who may make introductions for you. These include brand name founders, service providers such as lawyers, accountants, bankers, and even headhunters, and everyone who wants to break into the investment field. While these may well be potentially great sources of introductions for you, they can also be dangerous. Why? You may not know what a good or bad intro is. Many overstate the quality of their relationship with investors in order to improve their own relationships. And a bad intro could lead to a bad reputation for yourself.
And that’s all for this list of potential leads to VCs and who to approach. For next steps, stay tuned for part 2!
Source: Alexander Jarvis