The VC industry is highly competitive and raising capital is a challenge for everyone involved in the ecosystem. In these trying times, making a great first impression with potential investors has never been more critical. It’s not just about making a good impression in the moment — building long-term relationships is key to lasting success in the world of venture capital.
Personally, as an Investment Professional at a VC Fund of Funds, I had some days this year that I took a double-digit (!) number of intro calls with GPs. As you can imagine, at a certain point it becomes quite challenging to differentiate between the funds. And when I pitched in the past as a startup founder, I always remembered that the first thing I was pitching to investors wasn’t my product — but myself.
In this article, we’ll explore how GPs can impress potential investors right from the start and cultivate relationships that benefit both parties in the long run. So, if you’re a General Partner looking to raise capital and taking your firm to new heights, read on!
Before the first call or meeting:
- Research deeply: Look for information online, on social media, or through mutual connections to get a sense of the LPs’ investment strategy, background and professional history. By showing that you have done your homework, you demonstrate your professionalism and seriousness as a VC. For example, mentioning a few past investments of the LP during the conversation with a clever context shows that you took the time to dive deeper into their portfolio and understand their needs. E.g. ‘’I co-invested in company X with Gil Dibner from Angular’’.
- Master communication: You should be able to clearly articulate your fund’s strategy, performance, and unique value proposition. You should also be able to effectively communicate your personal and professional background and how it aligns with your fund’s mission. Also, adjust your introduction and greeting so that you come across as confident and friendly. Preferably, practice with trusted peers who can give you constructive and transparent feedback on the way you communicate. Looking back to past good meetings, a common denominator is when the GPs knew exactly to tick off these repetitive checkboxes quite efficiently, leaving enough room for me to dedicate the rest of the meeting to more in-depth conversation.
- Elegant flirting: Create excitement and interest pre-meeting by focusing on 3 different areas: intro, deck, and attitude.
- Intro: pick a channel where it’s most likely for the LP to decide to dedicate the time for an in-depth conversation. Prefer always warm intros over cold emails. Statistically, the conversion rate of inbound reach out to an actual deal is very small. Show that you have the network power to move things.
- Deck: always prefer a short deck (up 10–15 slides) or a one pager (even better) to show the highlights of your team, fund, and market. Experienced LPs (which should be your priority) should realize if it’s an interesting opportunity in only several minutes.
- Attitude: keep communication (most likely by mail) short and simple. There are hundreds of ways to deliver a message, but if your mail takes more than a minute to read, it already raises concerns about whether you know how to communicate effectively or understand how to prioritize information.
During the first call or meeting
- Own the show: Telling a great story can help you capture the attention of potential investors and create an emotional connection with them. Make sure that your story is relevant to your fund’s strategy and performance and highlights your unique value proposition. Why are you here today? what are your drivers? It’s easier to connect to stories than to facts. Venture Capitalists usually have done at least 1–2 impressive things in their life — if I learned something new from the call, you already got extra credit for the future.
Nonetheless, please remember it’s a date, not a lecture. You should be prepared to answer questions and engage in a meaningful conversation that can also challenge you, your decisions and plans. Avoid insisting on pitching if the LP is just interested to get to know you better.
- Be honest: While it’s important to be confident and enthusiastic about your fund, it’s equally important to be humble and transparent about your weaknesses and failures. It would help build trust with potential investors and demonstrate your willingness to learn and grow as a venture capital manager.
A single discrepancy can put the entire trust the LP built-in you in question. If you claim ownership of deals you didn’t do or manipulate performance metrics, it will eventually be found out during the due diligence process anyway and can stain your reputation in the LPs network. I remember a case when a fund was claiming in their deck the title of a ‘’Top Performing Fund’’, while their KPIs were in some cases below the median fund. That’s a recipe for an immediate ‘’pass’’ on our side.
- Build a relationship: It’s much easier for LPs to invest in you if they like and trust you. On the other hand, nobody will risk their money and commit to a long-term relationship with someone they simply don’t feel close to. During the meeting, you should be personable and approachable, and make an effort to connect with potential investors on a personal level. Be curious about the LP and share mutual interests and experiences. The other day I had a conversation with a GP, and we talked for 10 minutes about Tel Aviv, including the nightlife scene there. Nonconventional, but it works.
After the first meeting
- Be thankful: Follow up with a thank-you note to show your appreciation for the meeting and reiterate your interest in any opportunities or projects discussed. Use this opportunity to note down the next steps discussed and set the tone for the immediate next step, preferably with a timeline. Mentioning a few points that were discussed will also make the note feel more personal and warm. Humour is very welcome!
- Plan and build: Consider what you learned about the LP during the meeting and how you might use that information to build a stronger connection or collaboration in the future. Continue to build the relationship through ongoing interaction, such as social media engagement, networking events, or follow-up meetings. An extremely strong proactive step you can make is to try to add value already at this stage. If possible, make an introduction to a VC that might be interesting for him — it will show that you are a potential partner who understands the business and what LPs need.
Also, an important mindset to have during the growing relationship with the LP: ‘’There is Always Tomorrow’’. If you receive a ‘’No’’ at any point, don’t lose hope. There is always another opportunity to connect and update them on your fund’s progress. By maintaining a positive attitude and staying committed to building a relationship with potential investors, you can increase the likelihood of a successful partnership in the future.
In conclusion, creating a great first impression when meeting potential investors is crucial for success in the world of venture capital. By focusing on these important factors, fund managers can establish a positive relationship with LPs, gain their trust, and ultimately secure the investments they need to make their fund a success. Remember, every interaction is an opportunity to create a lasting impression, so it’s important to be thoughtful, intentional, and authentic in your approach.