Venture capital firms receive so many inquiries from entrepreneurs seeking capital that they have erected high barriers to make it difficult for entrepreneurs to contact them. But the nice thing about a wall is that there’s usually a way around it.
Keep Your Submission Short
The initial contact information you send should be just a cover letter and a 2-3 page Executive Summary. Focus on what sets your company apart from others in your market niche, particularly the factors that will enable your company to be extremely profitable. Sending out your full business plan is unnecessary at the outset. A concise summary is more likely to be read, and for confidentiality reasons you don’t want copies of your entire plan floating around dozens of venture capital firm’s offices.
Enlist a Trusted Associate
Entrepreneurs are often advised to obtain a referral to the venture capitalist, in other words have someone the VC knows refer your venture to them. The implied recommendation of your venture by a third party is valued by the venture capitalist. Again with the intention of obtaining the contact information for the partner in the firm, we have used the following technique. We call the main phone number for the firm, introduce ourselves, and say that an entrepreneur has asked us to recommend venture capital firms and we of course recommended their fabulous firm. But, we don’t know how best to get the executive summary to the partner — and we name the partner we are seeking to contact. This usually enables us to obtain the email address for the partner. After all, we have done something nice for them — recommended them to an entrepreneur.
Be Prepared to Hear No
Venture capitalists are in the business of mostly saying no and extremely rarely saying yes. When you contact them, you will collect a lot of no’s along the way. Sometimes you will also find venture capitalists who go out of their way to tell you what’s wrong with your venture (in their opinion). The problem with paying any attention to what they say is that you have no idea whether they spent 5 minutes or 5 hours studying your executive summary and considering your venture. No matter what you hear back from them, stay confident about your venture and its prospects for success. Realize that the reason for their decline could be about them, not you. Venture capital firms that say they are interested in early stage ventures sometimes actually shy away from them in favor of later stage companies where the risk is less. But they aren’t going to say, “We’re declining because we’ve totally lost our nerve and have become risk averse as a result of the bad conditions in the financial markets.” It’s better for their ego if they can say the fault lies with your venture. Just disregard what they say and forge on.