I mentioned in one of my older blog posts that “the best investments come out of relationships and trust,” but how do you build relationships when you can’t meet face-to-face with investors? Is the middle of a pandemic an appropriate time to even consider raising capital? Yes, it is possible to raise money right now—in fact, I’m currently looking for early-stage companies to invest in.
If you’ve already raised investment, your best chance is to approach your existing investors for more funds. If you’re just beginning your fundraising journey, it’s going to be more challenging to develop relationships with investors, but not impossible.
Here are some tips to consider if that’s you and you’re looking to raise right now:
I’ve recently read about the VC firm, Version One Ventures, funding seed and some series A rounds going between $500,000 to $2M. These startup investments have been done without ever meeting the entrepreneurs—it’s happening over Zoom.
I honestly think that you can do seed rounds and series A deals over Zoom. If you’re looking through the lens of an investor, we’re funding your proof of concept in this first round so we can do these deals quite quickly. Opportunities are enormous right now for early-stage companies who have fresh ideas. Although series A deals aren’t impossible at the moment, I personally tend to risk seed rounds easier because those deals require less money, which speaks to the point about how they happen fast and efficiently. During these initial stages, I’m betting on the entrepreneur, and I’m willing to take my chances with that online. In a time where everything has gone digital, there are plenty of options for ground-zero startups to use different technologies that make deals happen.
Before you start pitching and sharing your idea, though, make sure that the VC is in business for making investments right now. Many people are taking calls and going through the motions, but they may not actually be making investment decisions.
As much as I prefer face-to-face meetings, I’ve fully embraced this Zoom world we’re living in. This is the standard way of doing business now unless you have a team in the same town that you can safely meet with. I may not be going to places like Toronto 4–5 times this year, but I’ll still do deals there. Depending on where you are, initial meetings with me will look different.
If you’re from a different city or Canada, it will be strictly Zoom calls and a lot of back and forth sending each other documents, papers, and ideas. For the unforeseeable future, I won’t be seeing anyone unless they’re already in San Francisco.
If you’re local, I build relationships by doing activities (jogging is my top pick) to get to know you. Now that we can go outside and social distance, it’s possible to have walking, bicycling, or other outdoor meetings where you’re distant enough and also have a mask on—which is required here in San Francisco.
Local or not, emails with clear Calls To Action with your idea are crucial. We’ll spend plenty of time having virtual meetings to detail the investment process and deal.
Because we rely so heavily on Zoom meetings now, it pays to be good at them. The Wall Street Journal has outlined some rules for video conferencing to stay professional through the screen. These guidelines include closing your office door to shut out distractions, being on time, turning on your camera, not eating while on a call, and not having multiple windows open and trying to multitask.
A few other ones mentioned that are especially important if you’re trying to raise capital via Zoom is don’t pace around while you’re talking. You’ve got one shot at impressing investors online, so sit down and demand their attention. Get good at interrupting and know when to jump in to say, “Listen, this is what I’m really talking about.”
With that etiquette in mind, be aware that not everyone may have strong video skills yet. Angel investors or VCs may not be comfortable on-screen, and on the other side, we’ll also recognize that entrepreneurs may be having a difficult time. There’s a whole personal relationship that’s brand new and needs to be worked out virtually on both sides. I went through this transition with the MBA class I co-taught at the U of W when the pandemic started, so believe me—it does get better. Also note that everyone’s dealing with Zoom fatigue, and constant video chat meetings are more draining than in-person conversations.
Getting used to everything being remote takes time, so take a deep breath, relax, and lean into it because virtual is today’s established deal-making practice.
Make sure you have a good slide deck that’s short, sweet, and to the point, as you’ll be sharing that via Zoom screen share. You’ll want to cut your presentation down to 8-10 slides to ensure you’re only pitching what’s necessary and keeping investors interested. Taking Zoom fatigue into account, no one wants to have long calls because everyone is already exhausted. Be on your game each time you talk because it all comes down to effectively communicating online.
Because virtual pitches take more time, set up a series of calls and meetings instead. It may take longer to close the deal, but it helps everyone stay engaged and invested in your idea. Your main goal is to build close personal relationships because that’s going to be key in this business as you raise capital in our current situation. If you’re meeting with the right investors, you’ll probably have lots of Zoom calls, and they’ll likely dive into other conversations to get to know you personally.
The bottom line right now is that you should be pitching a simple solution and product that will launch your company and hopefully enterprise it in the future. I’ve seen small ideas expand into massive businesses—like Netflix, which started by shipping discs, or Amazon, that got its start by selling books. VCs want to invest in products that are tailored to right now, and they’re looking for ideas that could expand beyond initial thrust and have a platform potential to become something bigger. If you can see an opportunity for a current need, get to market and build on it.
We are open for business and looking for lots of interesting opportunities, so get your pitch ready. Let’s set something up over Zoom!
