Why 9 ? Don’t know.
On a plane back from Lisbon and in a very intense period of startup coaching, mentoring, scouting and showcases (NEXTBANK EU, Latam, Sibos, OpenAxel and DACH forum, plus Bootcamp ongoing).
So here s my contribution to how to approach a VC, from my humble experience so far :
1- talk with someone who knows the VC and can vouch for you. Not for the idea, for YOU as an entrepreneur. Sending a “hey Matteo, I have this great idea and here’s my PowerPoint” is a 3 times a day story, especially in this context with Fintech money not being very huge (yet…). If you don’t know the VC, get there. Follow them, see where they are talking, get info on the portfolio and the fund. In other words, give context.
2- send a one pager to start with. Do not overflow. Imagine that very often the first thing any of the partner you approach will do is to talk to the other partners. So the easiest you make that, the better chance you will have to catch their attention.
3- facilitate the work of the VC. Send already history of similar companies, valuation, acquisitions, IPOs. The easiest the diligence, the more straightforward the answer.
Fintech is a world with little or no history or data for VC, so the difference or the game you want to play is about the team and the fact you control well the domain you are getting on.
4- read a Term Sheet generic template you can download from Internet. There are protective provisions and you need to be prepared to accept them. This is crucial especially if you never raised money before. Nothing pisses off more a VC than having to explain what the very basic of a deal is, in series A.
5- in series A we focus on opportunity, not actuals. Highlight what problem the raised money is going to solve. Again, because of lack of history and data, valuation of a startup varies a lot. Your revenue might not be enormous and it makes a difference if you actually have more than a pilot.
6- there are thousands of banks in the planet… Say upfront whom can you sell to now and whom you cannot. Show you thought about it. We all understand that is complicated and lengthy and costly. But if you segment well your banking customers by needs, geography, connections amongst themselves and emulation factor, you show awareness and inspire confidence.
7- share your burning rate. Show it. Always good to understand how much did it take you to get where you are. VCs love entrepreneurs and love more cost conscious entrepreneurs.
8- highlight the Magic. But it’s ok if you don’t have it. As long as it s not too easy to copy it. If you have patents, say it. I you don’t, pls say you thought about it, because maybe the simple answer for you to give is “if we go fast enough we won’t need a patent”.
9- Never close up on a VC. VC loves startup who are progressing, with or without money, so if you do progress, give heads up.
Think of it : Fintech VC business has just started. Partners will change, new funds will rise. Keep the network alive without being invasive. It’s all about timing, remember.
I don’t want to give any lesson here and you can always claim that its so easier when you are on the right side of the money, but i really wanted to give a personal view on what works…