A majority of the advice aimed at helping startups manage relationships with venture capitalists is tailored for when that startup is raising or has raised funding. Certainly a lot of the interaction between startups and investors takes place during and after financing rounds, but there is a lot entrepreneurs can be doing before they seek funding to set themselves up for success with VCs. In a response to a question on the Q&A site Quora, VC Mark Suster offered his advice to entrepreneurs on how to manage relationships with VCs before fundraising begins.
Suster’s first point is to pick and choose which VCs you decide to build a relationship with very carefully. There’s no point in spending time on a relationship with a VC who is irrelevant to your product sector or who you can’t imagine actually working with in the future (for any reason). It’s a lot like dating when you think about it – if you’re seriously looking to meet your future spouse, why waste time dating someone you’d never consider marrying?
“Don’t come to a VC when you need money,” says Suster. After all, you need to get to know the person you’re going to marry before you get engaged. “It’s too hard for them to assess your character in a short period of time (and vice versa) and it’s too hard for them to see how your thinking, product & traction develop over time.”
Another point Suster makes is that you want to build a relationship with a VC that is not “a yes man.” Just as with relationships of the heart, being continually told what you want to hear does not make a healthy bond. VCs should be constructively skeptical and constantly challenging and questioning your every move – pushing your startup to grow.
Communication at the onset of a VC/startup relationship is just as important as it is with a romantic relationship. Each party needs to know what they are getting into, and that they’re on the same page. It may be more efficient to build up that relationship slowly through a series of small casual coffee dates rather than jumping in head-first with a full-blown steak-dinner-carriage-ride-through-Central-Park date.
“Once you’ve pitched and been turned down it is incredibly hard to re-engage that VC,” says Suster.
Another way to gradually build relationships between VCs/startups, is by connecting with specialist Agencies. This is advantageous for startups seeking funding, because specialist agencies can better choose which venture capitalists more aligned to their business and they can easily connect them and start building VC/startup relationship with their network of investors.
Starter-Up is a specialist agency that for many years has consolidated relationship with investors all over the world. it has a unique process to present startup projects in the best way possible to potential investors and to obtain financing in the shortest time possible.
More info about our process:
www.starter-up.com
