Meetings are important, but written collateral is mandatory for closing the deal

I’ve noticed a lot of founders raising capital prefer to have face to face meetings, as opposed to answering questions in writing.  Some don’t want to share a deck in advance of a meeting.

When you’re fundraising, I suggest keep in mind you are accomplishing different goals.  The goal of all communication with a potential investor (or any potential client) is to help you pass through 3 stages:
1) persuade the investor to meet you, then
2) become your advocate, and only then,
3) help your advocate win over her broader organization.

It is very difficult to get an investor to commit without one or more one-on-one meetings, ideally with as many of her colleagues as possible.  A retail investor might join an existing syndicate on a crowdfunding site based on a deck and maybe an email. However, usually the biggest challenge for a company is finding a lead investor, and that requires one or typically more meetings.   

At the majority of VCs (including ours), you don’t just have to persuade one Partner.  You also have to persuade the other team members to either approve the investment or at least not vehemently oppose it. If you’re talking to a VC, you should find out how decision-making happens.  Different VCs have different internal decision-making processes.  For example, Jeff Clavier, Founder, Uncork Capital, observes, “There is obviously respect amongst us as a team, and if one of us really wants to do a deal where he or she has an established track record, others will defer and support – unless the “over my dead body” card is pulled, in which case we pass.”  Providing answers in writing makes it easier for the lead Partner to share your view, and persuade her colleagues to back the investment.

I earlier wrote a checklist for the information to share with a VC.  I agree with Mark Suster, Managing Partner, Upfront Ventures, who recommends send the whole deck, not just a link.  

If you do not provide the answers in writing so that the lead Partner can readily share them, here’s what happens:

  1. Lead Partner asks diligence questions;
  2. You answer them in a meeting or call;
  3. Lead Partner may possibly take notes, which will inevitably be a diluted and imperfect summary of your response; and
  4. Partners have a meeting to discuss you, during which time the Lead Partner tries to win other people over to your side.  However, usually the Lead Partner is going to do a worse job pitching you than you can.

There’s only one way that you can simulate being in the room with the other Partners: prepare thoughtful, concise, neutrally worded responses to the investor’s concerns.  I’ve been in investor meetings where a colleague or I will pull up your deck or some notes, and says, “Actually, here’s what the company says about that…”

I suggest create a Frequently Asked Questions document, summarizing the questions you most commonly get from potential investors.  It shows a lot of self-confidence if you can share the entire document, giving new investors confidence that they have identified all the various issues which they should be probing.

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(c) 2018, which previously published this article.

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