01 May Find an Aligned Venture Capitalist
Having trouble finding venture firms that write you back? You are not alone. When raising venture capital, it is common to reach out to over 100 venture firms. On average, about 10 of these venture firms will email you back; and even fewer will actually invest. Why is this? Though there are many reasons and factors which can attribute to the response of investors, the foremost reason is misaligned values. Luckily there are ways to fix this, and they are quite easy.
Find your Industry
First, find venture firms which are aligned your industry. This will give you a great advantage, as they typically understand what you are trying to do and the overall needs of the industry. An example of this would be a company entering the smart contacts market for IoT devices. There would be no reason for this company to reach out to BioTech venture firms. They need to reach out to IoT venture firms such as Intel Capital, Andreessen Horowitz and Khosla Ventures. These firms understand the IoT market have made investments in uBeam, CellScope and Avegant.
Strengthen with Criticism
Second, “No” is okay. Many first time entrepreneurs and founders take being told “No” to heart. It can lower their self esteem and make it more difficult to reach out to investors in the future. Don’t let this deter you. When an investor says, “No, we are not interested at this time.” ask why. When they tell you the reason, use it as a learning opportunity to strengthen yourself. As you reach out to the next investor, you will be stronger and more prepared if the same problem arrises.
Third, think internationally. Though 40% of all venture capital firms are located in the U.S., and your company may be domiciled in the U.S.; It doesn’t mean you have to focus your fundraising efforts on U.S. firms. The remaining 60% of VC firms are located around the world. Find one from any corner of the global with a fund focused in your industry and reach out. You may be surprised how open they are to your idea. Don’t limit yourself or your company geographically. In most cases, innovative products can be used worldwide, and if that is the case, it can be easy to find worldwide investors.
In summary, find the top ten investors in your particular industry, then expand it to one hundred. Make sure they are from around the world and have invested in companies similar to yours. If they say, “We are not interested at this time.”, find out why and learn from it. As time goes on, you will become better at raising capital and investors will start taking notice. The checks will come and your idea will become a reality.