This is a stenography from one of the latest episodes of This Week in Startups. Jason Calacanis features the esteemed investor Jed Katz; he explains how to (and how not to) correctly interact with investors and achieve funding.
I found this talk very useful because it displays the inside thought process of investors, and it shows how they decide on who they will fund. It is particularly relevant for me because down the road my startup may need venture capitalist funding. I think anyone who is thinking about raising money from a firm will find this information useful.
I tried my best to condense the talk into a readable format. I altered some words and omitted/rearranged sentences for sake of readability. If you want to listen to the podcast click here. Katz talk is around 40 minutes. The speaker after is Kyle Hill, founder of Homehero; it is about company culture, and it is also very good.
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This is going to be a boring but practical talk. These are a bunch of pointers on pitching series A funds. What you should be thinking about. What the investors are going to be thinking about, and things that will make a difference.
[We will be going over] personal traits, choosing who to talk to and how to connect with them. Deciding how much to raise. What you need to show to get to a yes.
We will also spend some time on avoiding things that will lead to a quick no. Although a quick no is better than a no that takes forever to come your way.
The goal of the first meeting is to get a second meeting. That is all you’re trying to do in the first meeting of series A. It’s not like a seed meeting where someone might write a $50,000 dollar check after a half an hour of talking. You’re trying to get a second meeting. You’re trying to avoid a no. You’re trying to get the investors intrigued by yourself as a founder and your product, market size — all the things that are important to them.
Generally you will try to determine if there is a match between the two groups. Will your team work well with the investors? The goals of the first pitch is not to cover every detail about your business, they will not want to know every detail. The true details will take several meetings to get there. They want to know the most important things to either arrive at a no or spend more time on you.
The investor should see you as a great communicator; you need to be able to tell a story that wakes them up.