We are now recruiting for Pi Labs Cohort 5, and as such this seemed to be a good time to kick-off a general post about some tips and best practices to improve the chances of getting capital from us. Some of this is generic – it applies to both the pre-seed programme and to those seeking capital for their seed or pre-Series A rounds – some of it applies more to later stage funding rounds only.
Note, whilst some of this will clearly be relevant elsewhere, some of it is specific to our VC firm and moreover some of it is even more specific to me. So, please accept my apologies in advance!
As a general, clichéd, starter: be yourself. There are no bells and whistles with us. If you are passionate about what you are doing, you will do great as that instinctive passion will have driven you to this point and will come through: You will know far more about your business and market than you probably realise.
And so, without further delay:
1. Lets Avoid the Dance. The reason you want to meet us is because you want investment. The reason we want to meet you is because we are looking to invest. I know this; you know this. So let’s avoid the ritual dance of “picking one’s brains”, “getting a steer”, “mapping the landscape” or whatever new euphemism is out there these days. You are actually doing me a favour if you tell me what you want or better still, what you are planning. We see 1000s of opportunities each year and so anything that is well co-ordinated, thoughtful and allows us to plan our process properly is a massive boon. The companies that work their ways to my heart are the ones who start of by helping us (without knowing it): “We are seeing real traction with 100% month-on-month growth and are getting ready for a larger seed round in the next 6-9 months. Can we get together so I can update you on our progress?” Yes! Yes! 1000 times yes.
2. Meeting & Timing protocols. Nobody receives investment after one meeting. At least not here. The purpose of a meeting with me is either a) to decide whether this is something to take to the team and therefore set-up a second meeting (with other team members) or b) as a second meeting, having met another member of the team first, whether this is proceedable to proper DD/financials stage. So, if you come into the meeting with a “my round is closing next week” (which it isn’t, we all know that…) approach, we will politely decline by being upfront that that isn’t something we can deliver. We never engage in an investment process that we couldn’t deliver on; its not worth it on either side. Also, bear in mind we are not a VC who will invest because XYZ VC is investing, and therefore be reliant on their DD process. We do our own underwrite.
I would say our meeting times go like this (on average): first meeting/call, 30 – 40mins; second meeting, an hour; third meeting 2 – 3 hours. (There are more after this too, but these three meetings form the backbone to whether we are going to really run with this or not). Understand this. If you are in a first meeting with us, you need to tailor it accordingly. If we don’t cover everything because you thought you would have more time that’s your fault, not ours. I’m not going to eat into another company’s time for you – that’s not fair on them. The meeting invite is clear after all. We are not expecting to cover everything in detail in the first meeting. See my above comment – the objective is not to say yes to an investment but say yes to a second meeting with another team member. So: market size/opportunity, unit economics, co-founders/mgmt. team. We should be able to get a handle on all three in 30 mins.
3. People. You should only bring people to a meeting who are going to contribute. Don’t turn up with a fleet of people – you look ridiculous as a start-up. Co-Founders are best or a key hire. That’s it. You may also want to hold people back for a follow-up meeting – this is a good tactic. We almost always hold meeting 3 (see above) at your offices anyway so we can see you all in action.
4. Materials. In the first meeting with me – and forgive me, this is a very personal trait – I do not like the use of any materials. I simply want to hear the vision and passion from the founders themselves and I feel this is lost via a page turn or a deck. I know this differs to other VC houses too. That doesn’t mean don’t send me the deck in advance – by all means do – but I will want the meeting to be a discussion about your business, about you and your founders and how we could potentially work together.
5. Uber this, WeWork that. Whatever you do, please do not describe your business as the “[Uber/WeWork/Current Trendy Unicorn] of…”. This drives me crazy. It’s unoriginal, almost always inaccurate and suggests you cannot frame or sell your business/product on its own merits.
6. Questions, questions, questions. When we meet with founders, we are looking for a number of things: obviously we are looking for great companies or ideas to invest in – this goes without saying. But then there are the intangibles – people who we want to work with, are in step with how we operate and who want to work with us. There are a couple of signals on this (this isn’t exhaustive though): (i) generally how they respond to questions and (ii) what questions they ask. So, if I have a question, please answer it. Please do not tell me you will “get to it later”. It annoys me, as big-headed and unreasonable as that sounds. If you were in a board meeting and an investor director asked you a question, what would you do?
Similarly, engage me and ask me questions. I always leave time at the end for this anyway but I want you to proactively probe me, our firm, our approach, our values. It helps if you know a bit about us to kick this off. The best companies have grilled us on this sort of stuff; they really want to make sure they are getting the right investor. Giving away equity in your company is a massive step, so treat it with the respect it deserves by being thorough.
7. Not all Investors are the same. This is very obvious, but very few entrepreneurs get this right in my view. Please make sure you understand what it is that we do, how we are different and what we look for. Do not pitch to us as you would an angel, equally don’t pitch to a CVC as you would to us. There are obviously differences within the VC space too – know this backwards. In this context, it helps to have some rudimentary understanding of VC maths, fund return targets and what we need from an exit. There is plenty of material out there on this; I will be doing a blog post in the coming months on it too.
8. Numbers. Know these backwards, in every possible way. There should not be an aspect that you do not know, that you need to “look up”. Moreover, if we are talking numbers, make sure that they are all in sync. If we are talking about an output and you tell me its X, and then in another part of the discussion, the unit economics suggest it is in fact X*0.5, then that suggests you don’t know the market/business well enough and this isn’t something you are serious about.
9. Competition. Like your numbers, you should know it backwards. Those that suggest they have no competition are fools – either the idea isn’t big enough to warrant competition as the market is small; or there is a competitor out there waiting to crush you because you have not taken them seriously. Respect your competitors. A competitor in the US or Germany or somewhere that seems really far away (now) is a competitor today.
10. Defensibility. Linked to the above, this is crucial. If you have the best idea in the world, but is something easily replicable with some form of capital, it is very difficult for us to invest. You need some proper tech, algorithm, land grab, (preferably a deep combination of all of the above) to provide some form of defence. I will always ask about this, and I will always want a very good answer to this question.
11. Be nice. Again another obvious one, but don’t be rude/obnoxious to anyone (even if you think we aren’t looking). Just don’t. It goes round like wildfire and will just kill your chances there and then. Also, a small point which is thankfully becoming less prominent these days: don’t think you can bypass certain members of the team to go straight to the partners. You can’t. We think very highly of our team and expect you to, too.
12. Sales. A lot of entrepreneurs treat meetings with us as if they are some sort of sales pitch. This is not totally out of place – we do like to see what the business development capabilities are like in the team. However, self-awareness is a fundamental trait we are looking for. Knowing what you don’t know. Responding thoughtfully to questions and issues we may spot. This does not always dovetail with a “salesy” approach. Your business/product isn’t perfect. If it was, we wouldn’t be talking. It is important for you to realise that we are comfortable with that and you don’t need to do a hard sell…