Growthink’s Growthink’s InsiderInsiderInsider Secrets ... · PDF fileThe first...

Growthink’s Growthink’s Growthink’s Growthink’s InsiderInsiderInsiderInsider Secrets Secrets Secrets Secrets

to to to to Raising Venture CapitalRaising Venture CapitalRaising Venture CapitalRaising Venture Capital

SPECIAL

REPORT

Insider Secrets to Raising Venture Capital Page 1

From: Dave Lavinsky, President, Growthink

Dear Entrepreneur:

In this Special Report, “Insider Secrets to Insider Secrets to Insider Secrets to Insider Secrets to Raising Venture CapitalRaising Venture CapitalRaising Venture CapitalRaising Venture Capital,” I provide you with a

sneak peak at one of our most effective strategies for getting meetings with venture

capitalists.

For my complete, StepStepStepStep----ByByByBy----StepStepStepStep Guide to Raising Venture Capital Guide to Raising Venture Capital Guide to Raising Venture Capital Guide to Raising Venture Capital, go here:

http://www.growthink.com/products/venture-capital-guide

To Your Success,

President, Growthink, Inc.

OK, let’s get down to business…

Who is going to invest in your venture? Who is going to invest in your venture? Who is going to invest in your venture? Who is going to invest in your venture? There are hundreds of venture capital firms that you could potentially contact.

But you must understand that not all venture capitalists are created equal. Some are not

a good fit for your venture, but others may be a perfect match.

As with any marketing activity, you need to have a targeted campaign.

DDDDevelop a evelop a evelop a evelop a targeted targeted targeted targeted list of VC funds.list of VC funds.list of VC funds.list of VC funds. The first thing you need to know is that venture capitalists don’t just invest in whatever

companies they find personally interesting. Each venture capital firm invests based on

particular characteristics, including:

o Market SectorMarket SectorMarket SectorMarket Sector: Many venture capital firms focus on specific sectors such as

healthcare, information technology (IT), wireless technologies, etc. In most cases,


even if you have a great company, if you fall outside of the VC's sector preference,

they'll pass on the opportunity.

o Stage preferenceStage preferenceStage preferenceStage preference: VCs tend to focus on different stages of ventures. For instance,

some VCs prefer early stage ventures where the risk is great, but so are the

potential returns. Conversely, some VCs focus on providing capital to firms to

bridge capital gaps before they go public.

o Geographic locationGeographic locationGeographic locationGeographic location: Most venture capital firms only invest within 100 to 200 miles

of their office(s). By investing close to home, the firms are able to more actively

get involved with and add value to their portfolio companies.

So, for instance, if you are a pre-revenue software company based in Chicago, your best

bet is to find a venture capital firm within 200 miles of Chicago that has experience

funding pre-revenue software companies.

Make sure the VC is active.Make sure the VC is active.Make sure the VC is active.Make sure the VC is active.

This is a critical step, because if they’re not active, they won’t invest.

Go to the press release section of the VC's website and/or search Google News to see

how active the VC is. If the VC has not done a deal in the past six months, they probably

are not actively investing in new deals and may not be worth contacting.

What you will be left with is a list of VCs that are actively seeking companies like yours.

Once you have your investor list, the challenge is to find the appropriate contact person at

the VC firm and get in touch with them.


FiFiFiFind the appropriate nd the appropriate nd the appropriate nd the appropriate personpersonpersonperson to contact to contact to contact to contact. . . . VC firms are comprised of individual partners and associates. Once you find active VCs

that fit your sector, stage and location, find the partner(s) that you think might be most

interested in your company.

The ideal partner has invested in companies that are similar to your company and/or has a

background in your space.

The ideal partner also has some time to focus on a new project. For example, if a partner

currently sits on seven boards, they may be too busy to get involved with your company.

Next, cNext, cNext, cNext, contact that partnerontact that partnerontact that partnerontact that partner. . . .

But, before you make first contact, it’s important to establish a relationship with the

partner. At the very least, you should learn more about the partner, so that your initial

contact is as relevant as possible.

For example, you can find out if the partner has a blog (many do). If so, read their blog to

learn more about them and what excites them. It is also smart to post comments on their

blog so you can establish a relationship with them.

You might also see if the VC is active on Twitter (many are). If so, follow them on Twitter

and see what they’re posting about. See if there are opportunities to start a dialogue.

And all the while, think of these online interactions just as if they were offline in the “real

world.” Act just like you’d act as if you were meeting at a cocktail party.

If they don't have a blog or aren’t active on Twitter, then research them on Google to learn

more about them.

If you are a member of a business-focused social network such as LinkedIn or Spoke, see

if you can create a connection to them through that network.

You should definitely join LinkedIn and other types of online professional networking sites

if you are not already a member.


Send a “teaser” email.Send a “teaser” email.Send a “teaser” email.Send a “teaser” email. Next, once you have some history or at least a context from which to make a relevant

introduction, eeeemail the partnermail the partnermail the partnermail the partner.

Usually the email address is listed on their website. But if it’s not, then call the VC firm to

find out the partner's email address.

Avoid the all-too-common mistake of emailing a generic email address (such as

[email protected] or [email protected]). These types of

email addresses are like “black holes” – you’ll never see a response.

In the email, ideally you can make a connection to them via their blog or research (e.g., I

read how you are involved with this and that. Based on that, I think you might be

interested in my venture…).

THIS IS THIS IS THIS IS THIS IS IMPORTANTIMPORTANTIMPORTANTIMPORTANT!!!!!!!!!!!!

DoDoDoDo NOT send NOT send NOT send NOT send VCsVCsVCsVCs your business plan. your business plan. your business plan. your business plan.

You must realize that VCs are drowning in unsolicited business plans. They are NOT going

to read your business plan if you send it to them in the initial email.

Actually, you shouldn’t even send an Executive Summary or a PowerPoint in this first

email.

So what should you say in your email?

Instead of sending your business plan, give the VC “teaser”“teaser”“teaser”“teaser” points points points points about your venture.


What do I mean by “teaser” points? What do I mean by “teaser” points? What do I mean by “teaser” points? What do I mean by “teaser” points? “Teaser” points are 5 to 6 bullets (200 words or less) about your venture with the key

points of it.

The goal of the teaser email is to:

• Create intrigue and excitement

• Show that the market size is big enough

• Show that the management team is unique

• Prove that the venture is capable of generating significant revenues over time

• Create a sense of urgency (e.g., implying that you will get financing within 90 days

with or without them)

If the VC is interested, they will email you back to request an executive summary,

PowerPoint deck, or even your full business plan.

This strategy works.This strategy works.This strategy works.This strategy works.

As just one example, I used this strategy over a four week period to schedule over 50 VC

meetings for a company who eventually raised several millions of dollars of venture

capital.

I’ve included the “teaser” email on the next page (edited for confidentiality purposes).


SAMPLE SAMPLE SAMPLE SAMPLE ““““teaserteaserteaserteaser”””” email: email: email: email:

==================================================================================================================================== Subject:Subject:Subject:Subject: XYZ Company Introduction

Dear [Name],

I am contacting you because I am confident that our company will interest you.

Key facts about our company include:

• Leader in developing XYZ technology to improve ABC. 3rd party research shows

that this market is poised to grow from $100 million in 2008 to $2.5 billion in 2012

• Our president is one of the world's leading authority on XYZ technology . He has

six XYZ patents and was one of twelve experts worldwide who spoke at the

recent XYZ technology conference

• Our technology provides critical advantages over ABC devices (the technology it

displaces) and other XYZ firms

• 2008 revenues/grants total nearly $500K

• Key strategic alliances/partnerships have been formed with Partner 1, Partner 2

and Partner 3

• Our company is based in Madison, WI

We expect to close this round of financing in the amount of $5 million in the next 90 days.

Please contact me directly at [555-555-5555] if you would like to learn more about our

company and/or to schedule a meeting.

Regards,

Dave

====================================================================================================================================


I hope you’ve enjoyed what you’ve learned in this Special Report. This methodology is

time-tested and proven. In other words, if you have a “fundable” business and you follow

the tips in this report, chances are you will get at least one meetings with a VC.

Why am I so confident? Because getting meetings with VCs is actually pretty

straightforward – if you don’t make the obvious bone-headed mistakes that hundreds of

entrepreneurs make every day. But there’s one (BIG) problem…

Let’s say you follow the tips in this report and you are able to secure 10, 15 or 25 meetings

with venture capitalists. Well, you might think you’re about to get funded, but in reality…

Getting VC Meetings Getting VC Meetings Getting VC Meetings Getting VC Meetings ≠ Getting Funding. Getting Funding. Getting Funding. Getting Funding.

In other words, e e e even if you ven if you ven if you ven if you get get get get TONSTONSTONSTONS of of of of meetings meetings meetings meetings with VCs with VCs with VCs with VCs,,,, yyyyour chances of our chances of our chances of our chances of actually actually actually actually

rairairairaisingsingsingsing venture capita venture capita venture capita venture capital l l l will still bewill still bewill still bewill still be slimslimslimslim----totototo----nonenonenonenone,,,, ifififif youyouyouyou don’t know what you’ don’t know what you’ don’t know what you’ don’t know what you’re doingre doingre doingre doing....

Let me be blunt… If it were quick and easy to raise venture capital, everybody would do it,

and everybody would be multi-millionaires or billionaires – but that’s NOT the reality.

In reality, it’s not the meeting that gets you funded. Rather, it’s what you do before the

meeting, at the meeting and after the meeting that will determine whether or not you get

funding, and whether that funding comes on favorable terms, or whether you gain or lose

control over your company’s future.

The vast – VASTVASTVASTVAST – majority of entrepreneurs fail to raise venture capital because they’re

unprepared, they lack the necessary knowledge of how VC really works, and they lack a

proven, step-by-step action plan for getting funded.

I created Growthink’s StepStepStepStep----ByByByBy----Step Guide to Raising Venture CapitalStep Guide to Raising Venture CapitalStep Guide to Raising Venture CapitalStep Guide to Raising Venture Capital for precisely this

reason – to show you all the pitfalls ahead of time (so you can avoid them), and to give you

the expert advice and tools you need to successfully raise venture capital.

The Step-By-Step Guide to Raising Venture Capital will answer all the questions you

MUST know, including:

• What you need to accomplish before raising venture capital

• The 2:6:2 rule of venture capital and how to modify the way you present your

company to play into it

• The types of companies VCs love to finance and how to position your company as

one of them


• The exact criteria VCs will use to judge your company

• How to create your high concept pitch, and why it’s so amazingly effective in

attracting VCs

• The one, overlooked section of your business plan that is critical to raising venture

capital (HINT: it’s NOT what you think it is)

• The ten (10) questions that your investor slide presentation must answer, and how

to order and format your presentation to maximize effectiveness

• How to find the right partner to contact at each VC firm

• How to tell if a VC is serious about funding your business...or just wasting your

time

• The exact technique a 22-year old college dropout used to raise venture capital

• What it means to “over-shop” your deal and how to avoid this like the plague

• What information to cover in your VC presentation and what NOT to say

• How to properly answer the “trick questions” that virtually all VCs will ask you

• How to develop rapport with VCs that results in a big financing check

• The fifteen (15) most important venture capital negotiating issues and which ones

to fight hard on and which ones you can give in to

• How to gain leverage to better negotiate the terms of your financing

• What you MUST do before signing a term sheet, or your financing could disappear

forever...

• Two (2) insider techniques to raise venture capital while protecting your business

ideas and intellectual property (IP)

• How to expertly follow-up with VCs and when persistence is a good thing (and

when it’s not)

• What to do if your management team is not complete

If you’re serious about raising venture capital, you can learn more on this page, here:

http://www.growthink.com/products/venture-capital-guide

To Your Success,

President, Growthink, Inc.

Growthink’s Growthink’s InsiderInsiderInsider Secrets ... · PDF fileThe first...

Documents

Transcript of Growthink’s Growthink’s InsiderInsiderInsider Secrets ... · PDF fileThe first...