"Land & Expand" To Improve Your Odds of Getting to Yes With a VC | VC Remote Jobs & More
"Land & Expand" To Improve Your Odds of Getting to Yes With a VC | VC Remote Jobs & More
Overcoming Your Odds To Get Yes From VC for Funding | VC Remote Jobs
📢 Today At A Glance
Focus On: How to Improve Your Odds of Getting to Yes with a VC ?
Major News In Startups: WeWork Saga Cost Masayoshi $13.7 Billion, Tiktok Shuttig Down $1B Creator Fund & More
This Week’s Must Reading on Startups, Venture Capital & Technology
Venture Capital Remote Jobs & Internships: From Scout to Partner
🤝 In Partnership With : Levy
Reclaim Your Precious Time With Customized Back-Office Solutions 💡
Battling common founder woes—operational backlog, HR tasks, and financial compliance? They inefficiently chew up to 40% of your valuable time, preventing you from focusing on what truly matters - growth.
👉 Levy solves HR, Compliance, Finance and Equity headaches for founders, without the need for their valuable time.
Join top CEOs - who trust Levy to simplify compliance, save time and skyrocket growth!
🤝 Advertise in The Venture Crew’s Newsletters
Want to promote your startup to my community of 14,000+ entrepreneurs and investors? Reply “advertise” and I’ll share my media kit.
📢 How to Improve Your Odds of Getting to Yes with a VC — “Land and Expand”
Raising capital is a sales & marketing process. As a founder - Your company is the product and you’re selling an equity ownership in your company but much more broadly you’re selling trust & confidence that you’re going to build something enormously valuable and that you’re going to be enjoyable to work hand-in-hand with over the coming decade of each other’s lives.
Last Saturday (same investor from the previous post), I had a brief call with an investor (called Investor-A for privacy reasons) who has over 7 years of experience in the VC. We discussed valuation numbers and the how founder can improve the odds of getting to yes from a VC.
He shared some good tactics advice (inside info.. boom) that even I felt that most of the founders were unaware of. So I thought to share those tactics with you in this post, So let’s deep dive into it!
To understand how to “get to yes” with a VC you first need to -
Understand how VC partnerships make decisions and then you can understand how to increase your odds of closing a deal.
VC Partnerships
Start by understanding how many partners are at the firm you are approaching. It’s pretty easy since nearly every VC lists its partners on the website. Some firms are trickier since they artificially call everybody “partner” but they’re not all “investment partners.” It’s super easy to suss all this out.
Find a portfolio company or two that they’ve invested in. Find one that’s on the earlier-stage size or one that was raised a long time ago and never scaled and get to know the founder & CEO.
They can likely give you the entire playbook of the partnership if you build a meaningful relationship with them and they trust you. The key to your “consigliere” is that they can’t be crazy busy because they’re scaling at meteoric rates.
What do you want to know?
How many partners are there?
Which partners are active and which are less active?
Who in the firm has the “pull” to get deals done when they want to?
Which partners work well with which other partners?
Who are the most optimistic partners and who are the most generally skeptical partners?
How does the partnership typically make its final investment decisions?
Decision Dynamics
Each firm makes decisions in different ways so understanding the firm’s decision framework matters. Some firms are “consensus-driven” and look for unanimity in the decision or near unanimity. Some partnerships are “conviction driven” meaning they’re looking for a super-committed partner who will slam his or her proverbial fist on the table to push through a deal.
Those partnerships want to know that the “sponsor” of the deal is willing to have his or her head on the chopping block advocating for this deal. In larger partnerships, you often have “shadow partners” who serve as the role of an advocate (or detractor) to the main sponsoring partner.
In any event, the process is you meet a partner (whether you went direct or first built support from an associate) and that partner decides whether to bring you to meet more people and eventually to a “full partner meeting” which in most firms is on Monday. Usually, after a Monday partner meeting you get a pretty strong:
Yes, the term sheet coming
No, sorry we’re passing
Maybe, we need to do more due diligence/analysis/work
I always counsel founders that “good news comes early” so if you haven’t heard by Tuesday at noon chances are it wasn’t likely a clean “yes.”
The Role of “Other” Partners
You also need to be aware that every partnership has partners who are not full-time investment partners. These can be called: Operating Partners, Venture Partners, Board Partners or similar.
These are often seasoned executives who influence the firm but aren’t carrying a full load of annual new investments. They might sponsor an occasional deal, they might be looking to jump in and run a company or they might take the board seat if the firm invests. Every partnership is different so it’s worth knowing whether you’re talking with an investment partner or another partner and what their actual role in the firm and investment decisions is
Source: Google Images
The Role of Non-Partner Investment Staff
Most VCs have investment staff who are not yet partners. These can be called Analysts, Associates, Principals or similar. The “A’s” typically don’t have investment authority and Principals depend from firm to firm.
The role of these investment staff varies firm-to-firm but they often entail:
Sourcing deals for partners
Helping with initial deal screening with a partner
Helping with due diligence (competitive assessments, customer calls, reference checking, market sizing, technology reviews, etc.)
Building models to evaluate the deal and/or reviewing customer files, company financials, business plans, etc.
Adding colour to partner discussions during a Monday partner meeting
Completing due diligence post partner meeting for thorny questions that were raised
How a Monday Partner Meeting Works
(Generally Monday - Vary from firm to firm)
You come in (online meet sometimes) and usually have between 45 minutes to an hour to present. The best companies build a deck and a cadence to use up 50–60% of the time and save a buffer for discussions. If the questions aren’t organically flowing you have “pocket slides” after the main deck you can pull out to share more information or analysis.
You leave. The sponsoring partner often outlines his or her thesis and then feedback on the company is offered. Sometimes these are love fests but usually, they are pretty brutal takedowns of why a company would or would not work.
A vote happens at what’s called an “investment committee” and the sponsoring partner is tasked with what comes next.
Some firms have formal voting systems and if the vote passes the deal gets done. Some firms have broad discussions and then resolve the final investment decision until the sponsoring partner answers more questions. Some firms — whether they have voting or not — have a “super user” partner that has all the juice in the vote whether that’s formal or not. Some partnerships allow “vetos” and others don’t.
What Happens When There’s Dissent on the Investment Decision?
If the firm is consensus driven a deal will be killed.
If a firm has a voting policy and a set number of “no’s” come in the deal is killed.
If a firm has a “super user” partner or a “veto right” and somebody kills a deal then the deal is dead. In some firms, dissent is tolerated but then the sponsoring partner has to show ownership of the concerns raised by the dissenters.
Investor A said that he has sat in some meetings where they decided in 20 minutes and in some meetings where an argument lasted 2 hours. Honestly, it can be draining (Investor A Said)….
Investor A shared experience of his firm on decision making:
“We’re conviction driven
If somebody has deep conviction “against” a decision would be postponed and a small group might caucus later with more information answered
We have 4 full-time investment partners and every partner has an equal say. We also take input from our board partners and our non-partner investment staff.
We operate a policy of “no retribution” and “no reciprocity.” This is critical to build a cohesive venture capital firm. If you have retribution (you argued against my last deal so I’ll argue against yours) you have animosity. Anybody who knows VC knows that this retribution-type behaviour exits and is corrosive. Reciprocity is equally destructive. It says “You approved my last deal so I feel bad and will approve yours even though I don’t love it.” This produces shit deals getting done.”
How to Land and Expand
This was a long walk where investor A tried to bury the lede. But one advice he has for every founder is that “you not leave your entire outcome simply to your sponsoring partner and/or associate.”
Think about it … if you have 4 investment partners and a whole supporting cast of influencers and you have only met with one partner and then you appear in front of a committee of deciders who have never met you before — that’s a lot riding on your pitch and the willingness of the sponsoring partner to advocate.
This is Sales 101.
You find a champion but then you find reasons to meet other staff before the meeting where your fate would be decided. VCs are busy people and just because one partner is showing you time doesn’t mean others easily will before a partner meeting.
Find productive reasons why your sponsoring partner or associate can introduce you to other partners. Maybe you have some knowledge they would find valuable? Maybe they’ve worked with a similar company to yours before. Maybe you go from meeting a partner to meeting 3 associates to broaden your relationships and learn more about the firm. Maybe they even help you meet other partners?
There are a million methods for building broader relationships in any buying organization but there is one key lesson that can’t be ignored. The more people you have in that partner meeting who come in with a stronger sense for what you do and the more you have answered their biases and concerns in advance the higher the probability of getting to yes.
Summary
Every VC firm is different and the decision processes vary; however, they all form the basis sponsor / supporting staff structure and the more people you know when the investment committee happens the higher the probability of success.
Good luck with your raise! Remember, it’s not easy for anybody. Even the ones who tell you they’re “crushing it.”
That’s it!
🛠️ Want To Break Into VC?
Join our 100+ VC Enthusiast Community - VC Crafters - To Access the VC Network, Job Opportunities, and Weekly Events By Investors and founders!
📰 This Week’s Major News: Venture Capital, Funding & Tech
Proptech Startup Backed By Airbnb Shutting Down Read Here
WeWork Saga Cost Masayoshi $13.7 Billion Read Here
TikTok shutting down its $1Billion Creator Fund Read Here
Former Twitter Execs' Launch VC Firm Read Here
Investors From Bill Gates Investment office launched VC fund Read Here
Subscribed To, VC Daily Digest Newsletter and join 6500+ Avid Readers For Daily Morning Venture Insights, Funding Updates And Startup Stories In Your Inbox. 🚀
🗞️ Weekend’s Read On: Startup, Technology & VC
Top 10 Trends for Data in 2024 Read More (Technology)
Even the Smartest VCs Sometimes Get it Wrong — Bill Gurley and Regulated Markets Read More (startups & venture capital)
15+ Ways a Venture Capitalist Says “No” Read More (Startups)
The Six Moats of Data Businesses Read More (startups & venture capital)
Do the things, that don’t scale by Paul Graham (My Fav.) Read More (Startups)
Join 8500+ Founders, VCs and startup Enthusiasts Getting Tactical To Build, Learn and Implement Startups, Technology and Venture Capital.
💼 Venture Capital Remote Jobs & Internships
Associate Counsel - 500 Southeast Aisa | Remote - Apply Here
VC Working Student - Antler | Remote (Germany) - Apply Here
VC Associate - Toyota Venture | Remote, USA - Apply Here
Associate, New Venture Creation in Climate | UK, Remote - Apply Here
Investment Analyst Intern - 212 Venture | Remote - Apply Here
Venture Scout - First Momentum Venture | Germany, Remote - Apply Here
Investor Relationship Manager - Playground | Remote - Apply Here
Senior Analyst - Chan Zuckerberg Initiative | Remote - US - Apply Here
Temasek - Various Positions | US - Apply Here
Join our 100+ VC Enthusiast Community - VC Crafters - To Access the VC Network, Job Opportunities, and Weekly events on understanding the VC Industry!
👉 Join top CEOs who trust Levy to simplify compliance, save time, and skyrocket growth.
✍️Written By Sahil | Venture Crew Team