Fancy a coffee sometime?Added by julian on Mon 27th Feb, 2012 10:16
A huge part of any VC financing is simply getting to know you, the entrepreneur and/or your team. Any VC will want to know all about you, your career background, your current personal circumstances, your financial standing and how you came to start your business, what drives you, what makes you happy and why are you doing this venture.
From a VC perspective it is imperative to know this information, it helps build a perspective on the individual and the effect that individual can have on the business.
The VC business is a high risk and potentially high reward business. A key factor for the VC is to de-risk the potential investment as much as possible. Of course this is mainly done through due diligence which is a detailed, time consuming examination of the business correlating what the entrepreneur has stated to be true (known as warrants on a term sheet) but another major contributor to this is the need for trust and familiarity as well as authenticity and honesty.
If you make a 'cold' application then the VC has to build a relationship with you. A 'cold' application can be dramatically enhanced if it comes from a trusted source. If you don't have an intro then you would be advised to reach out and try to illustrate what you are trying to achieve and to come back to the VC when you have achieved it.
There has to be synergy and a total alignment of where the business needs to go, therefore that relationship has to be as strong as possible. If I don't like you, I'm certainly not going to invest in you as we need to work together for a number of years and thorough a lot of ups and downs.
Mark Suster describes this perfectly in his article 'Invest in lines, not dots' that describes a first meeting as a 'dot' and further meetings as more 'dots' but now those 'dots' are joined by lines.Tweet