After 400 Meetings with Investors: How to Close Your First Check
Ok, maybe you won’t take 400 meetings like I did. But there are 2 strategies to help you close your first check:
- Meet investors early so you can build the relationship
- Pitch the vision, not the statistics/numbers
So many entrepreneurs make the mistake of thinking they need to have all the right numbers to pitch investors before they go out and actually pitch them. They delay going out to meet with investors because they haven’t hit X metric, or don’t have the right biz dev person on their team. First-time entrepreneurs want everything to be perfect, or close to perfect before they go out to raise; but let me tell you, there is never a ‘perfect’ time to meet with investors. It’s like breaking up with that boyfriend, there’s never a good time to do it. You just do it, sooner rather than later.
What first-time entrepreneurs don’t know, is that going out early to fundraise, sometimes even pre-product, helps new investors get to know you and you them. Like any relationship, it takes time to build the trust and get to know personalities. By taking meetings early on, both sides get the opportunity to learn about one another and grow the new relationship. A would-be investor gets to see your progress, and your personal and business growth so they’re more comfortable investing in your idea.
Another important fact for first time entrepreneurs: the numbers are never enough. These investors hear numbers all day, and they constantly compare you with engagement numbers of Facebook, LinkedIn, Amazon, etc., even though most of these companies are over a decade old. No matter what numbers you have early on, do you think they will be big enough to compete with the daily active users (DAU) of the giants? Also, as soon as you shift from a vision pitch to a numbers game, their brains move to the other side and it becomes all.about.numbers. And let’s be honest, when you’re a fledgling startup, you’re going to lose in this numbers game, every time.
Breaking into the startup world takes time. You have to build relationships, especially if you don’t come from Silicon Valley or have a built in network from Stanford. Make sure to keep your vision big, and don’t bog the VCs down with small numbers and details. The first time you meet an investor you should be talking mostly about who you are, what your idea is, and the stellar technical team you’ve put together to execute the grand vision of what you want to build. Articulate this vision well with a deck that takes the investor through a clear start-to-finish path. Sequoia has a great template you can use as a framework. If you have a product to demonstrate, great! But if you don’t, having some slides of what the design of the final product is fine.
Continue to show your progress to all the investors you like and want to work with, and hopefully the feeling is mutual and you can close your first angel/seed check to hire more people!
Dana Loberg is CEO and co-founder of Leo AR, the first augmented reality communications platform that gives anyone the power to enrich the world around them with realistic 3D and 4D animated objects and photogrammetry. Follow her @luckyloberg.