Venture Capitalist Associates and Entrepreneurs
I remember it clearly: we were less than a year into Pardot and a venture capitalist reached out to us asking to talk. Excitedly, we set up a time for the call and waited anxiously for the date. Finally, the day arrived and we talked for 45 minutes only to realize that it wasn’t a good use of our time: the associate’s firm requires potential investments to have at least $5 million in annual recurring revenue whereas we had less than a million.
Here are a few thoughts on calls from VC associates:
– Associates cast a wide net and engage with as many entrepreneurs as possible, regardless of whether or not they’re a good fit yet
– While associates source deals for the partners, most of the firm’s investments come from referrals and existing partner relationships — not from associates cold calling
– Know that associates aren’t the decision makers at the firm and that they spend a huge amount of time cold emailing and cold calling startups (not too different from a sales rep)
– Before taking a call from an associate, ask a number of qualifying questions, and only take the call if raising money is on the horizon (remember that the best time to raise money is when you don’t need it)
– If getting ready to raise money, associates can be a good testing ground and opportunity to practice the pitch
– Make an ask at the end of the call to be introduced to three portfolio companies that might be potential customers
In the end, most entrepreneurs shouldn’t engage with associates unless they’re going to raise money in the near-term and they’ve pre-qualified the firm to ensure it’s a good fit. Too often, entrepreneurs get excited when a VC associate reaches out and it’s not actually a good use of time.
What else? What are some more thoughts on entrepreneurs and calls from VC associates?
Posted by David Cummings on David Cummings on Startups