Monthly Archives: September 2011

The VC Fundraising Process: Investor Follow-up and Due Diligence

phoneKeypadIf you’re following along with our series of posts on the venture capital fundraising process, the next step in the process is to follow-up with prospective investors.

The three most important words in fundraising are follow-up, follow-up and follow-up. Venture capitalists are working on a million things simultaneously, including managing the fund and their Limited Partner investors, helping their current portfolio companies and sourcing and conducting due diligence on new investments. As such, keeping their attention focused on your deal is imperative. Don’t bug them but do be consistent and regular with your follow-up.

A focused due diligence effort will not only answer all of the investors’key questions, it will anticipate most of them.Responding quickly to a due diligence list shows your professionalism and will leave the investors with a positive impression of your company.

Here’s one more piece of advice: This stage can often involve investors conducting a site visit or calling your company’s advisors or other key opinion leaders.Having a common story between your company and your advisors ensures you leave a consistent message with the investors.

The VC Fundraising Process: Management Presentation

Management presentationIf you’re following along with our series of posts on the venture capital fundraising process, the next step in the process is the management presentation.

The slide presentation and potential demo that was prepared during the pre-launch phase is now presented to the targeted VC, often at a meeting of the entire VC partnership.This first impression is critical to deal success. In other cases, the partner who sourced the deal will take the first pitch and your company will need to return to pitch the full partnership. This first impression is critical to deal success as most investors will form their impression quickly after the start.

Here are a few pointers for putting together a solid presentation:

  • Your first slide should be a list of investment highlights or an overview of the opportunity.
  • In general, don’t take 20 minutes to build up to what you actually do as a business.
  • Introduce members of the team early instead of putting that information last. Often VCs prioritize the team above everything else so it’s important to get this right and have the right people at the pitch.
  • Market opportunity should be next and should introduce why there is an opportunity for a new company or product like yours.
  • Next is the overview of product/service/data. This is where you provide the meat of the presentation.
  • The commercial opportunity section should lay out how you plan to capture revenue and market your product/service.
  • While financials are often very speculative, they are required. The fundraising plan is almost more important, at least in the short run, than the projected revenues because that is what the new investors will be “on the hook” for.