If you’re following along with our series of posts on the venture capital fundraising process, the next step in the process is to reach out to VC firms.
The outreach process is where the rubber meets the road. Once all of the materials have been prepared and the due diligence virtual data room is ready, you can begin to reach out to venture capitalists (VC).Depending upon if your company is using a placement agent, the outreach may be done by your banker, the CEO, CFO or another member of the senior management team designated as the point person for the transaction or for that investor relationship.Regardless of who is managing the process, the CEO will be involved in every pitch, unless the roadshow requires two teams to simultaneously conduct management meetings.
The initial outreach can be via phone or email to introduce the opportunity but any emails should be followed up by a phone call to make sure the executive summary was received and properly understood.A phone call can also help establish the initial interest and setup a management meeting.
Before sending the first email or making the first phone call, you need to establish the investment rationale behind your pitch to a particular firm and why your company is a good fit.The more tailored your pitch to a VC is, the more likely he or she will be convinced to take the meeting.
Another important point is that you must really understand the point and purposes of an initial email/first call.Your objective should be to get the VC to review your business plan/PPM and agree to listen to the management presentation (discussed next).
Trying to close the transaction at this stage is pointless so make sure your call script is oriented only towards getting the meeting.Many companies don’t make it to the management presentation so if you receive that opportunity, your odds of investment are much higher and you are in the game.