3 nights with 10 VC investors and 300+ founders.
3 nights with 10 VC investors and 300+ founders.
Find out what happened when we flipped the script and asked investors to pitch to over 300+ founders.
Welcome back to your Curiosity Center!
The reason for this newsletter is simple: We explore our curiosity and share what we learn along the way, and take you inside topics, companies & industries. Stay up to date by joining your friends here:
In September, after a conversation with an investor friend — our founder Vidit Agarwal had an idea to innovate the well known practise of “pitching” and use his investor network to experiment with a format. This could be a huge failure or a huge success.
Let’s find out…
Just three weeks later, the first of 3 events in this series was launched with 100 founders in attendance.
Open the doors to how VC’s work, what and why they invest in and when.
And for founders, especially early stage founders yet to raise capital to get a front row seat (literally) to see the VC’s pitch their funds, ask questions and get direct inside access.
The venture capital world in Australia is diverse and whether you’re a student, founder or just technology curious – it can be a lot to digest. Recently, we organised and hosted 3 special LIVE events — Reverse Pitch Nights featuring some of the best investors in Blackbird, Afterwork, EVP, Main Sequence, Airtree, Grok, Side Stage Ventures, SquarePeg, Skip Capital and OIF.
We selected this group to showcase how nuanced the investor landscape is with different investment areas, stages of investment and fund structure. Don’t worry, you’ll learn what this means as you read along.
Many common themes came up, including:
What does reaching out to VCs look like?
How should one keep in touch with investors when they say “keep in touch” after they pass on investing?
What does the investment process involve from initial meeting to term sheet?
What unique value, besides money, can VCs provide to founders post-investment?
How does the current economic climate affect founders and potential investment?
What do investors want to see in emails or pitch decks that grab their attention in minutes?
What helps founders get across the line in the first meeting?
And more!
Below we explore each of these themes based on the responses from the VCs from the three Reverse Pitch Night events.
What does reaching out to VCs look like?
This generally involves reaching out to an investor or partner at a VC through an email as their social media inboxes tend to be flooded.
You can approach anyone at a VC, but be conscious that senior members i.e. Partners tend to time poor whereas associates and investment managers spend most of their time entertaining pitches and meeting founders.
VC’s receive hundreds of pitches a week. Think of how you can standout from the crowd. Perhaps this could be a succinct email or is it a warm intro or is it incredible traction in your business?
Additionally, it is important to ensure that you reach out to VCs that invest in the type of business you are building keeping in mind the industry, size and revenue. For example, Grok invest in a lot of climate focused startups. Build this research to ensure you’re a fit for the investor.
How should you keep in touch with investors when they say “keep in touch” after they pass on investing?
“If an investor says keep in touch, it’s a cop out, hopefully, they tell you they are passing because of X.”
Mason Yates, Associate at Blackbird.
“I would encourage founders not to do monthly or quarterly updates to investors.”
Justin Lipman, Partner at EVP
“Be so good they can’t ignore you.”
Jessy Wu, Principal at Afterwork
Often times investors might tell founders to keep in touch and it’s important to understand what this involves.
Particularly if a VC passed on the opportunity to invest, founders should make a point to note down feedback as to why they were unable to build conviction with the investor.
This should be followed by taking proactive steps to work through the action points provided, such as de-risking a certain area of your business and then articulating to the investor how you have worked through areas they were hesitant about.
Most VCs encouraged founders to update investors when noteworthy developments have occurred in their business, compared to sending monthly or quarterly updates.
What does the investment process involve from initial meeting to term sheet?
The consensus amongst the VCs was that founders could reach out to anyone in their team, and it has no affect on how the opportunity is treated.
If an investor is interested they will have a meeting with you to review a high-level pitch of what it is your business is doing. It is more typical for a junior person to lead the process until the deal needs Investment Committee (IC) approval, which is comprised of the partners of the VC firm.
Keep in mind: It’s important to ask the specific investor you’re working with about their investment process as this can vary from one VC to another. Do not just solely rely on a blog post.
Hey! Before you continue reading the rest of this article….
Check out our leading The High Flyers Podcast to access 100+ of world's leading minds, companies and industries in candid conversations, hosted by Vidit.
And you can contact us directly here to share your feedback, ask questions or discuss sponsorship opportunities.
What unique value, besides money, can VCs provide to founders post-investment?
Once a VC has decided to invest in a startup, they very much view the transaction as a long-term relationship with that company.
This involves welcoming a founder into their community of companies where they can access resources and connect with fellow founders.
The VC wants to see you succeed and is therefore willing to provide the support you need, whether it is helping with searching for talent, reaching out to co-investors or acting as a board member to help govern difficult decisions.
It serves well for founders to speak with founders of VC portfolio companies, in order to gauge a better understanding of the tangible support they have received.
How does the current economic climate affect founders and potential investment?
The consensus amongst most investors was that they don’t see the looming recession making a massive impact on seed or pre-seed investments.
Whereas, for founders of later-stage companies looking to raise in this environment, the impact may be more profound, particularly on valuation and the exit opportunities available.
Although they have seen the sentiment amongst international VC’s slowing down a little, investment are still being made into various startups, however, rounds may be taking longer, and valuations are not as high.
What do investors want to see in emails or pitch decks that are standouts?
Investors are sent a lot of memos and a lot of pitch decks, therefore it is important to play to what it is they are most interested in seeing, and for the investors we heard from this includes a customer journey where a founder can show how they are changing experiences.
Additionally, keep in mind that you must ensure the investor you meet (whether it’s a partner or associate) clearly understands what your business does in the quick initial meeting. This is critical as they need to be your advocate inside the firm and get buy in from others, for you to be able to progress through to eventual term sheet signing.
Lastly, it is important to create a pitch deck that fits the stage of your business. For seed-stage companies, this may involve expressing an engaging story, whereas for Series B, it may be metrics and relevant unit economics. An investor should be equipped with the information telling them why they should invest.
What helps founders get across the line in the first meeting?
“The most important thing is [the] founder, ideas will pivot and change, macro environments will change.”
Ada Yin, Investment Manager at Airtree
“[The] top of the funnel is about fit, is it a deep tech company, solving 1 of 6 problems [we focus on], [is there an] R&D component? Could you be venture scale? [If yes] will then set up a call and have [a] discussion.”
Jun Qu, Senior Investment Associate at Main Sequence
“An investor will most likely take a second meeting if they are [a] hell yes and super excited after.”
Sam Tidswell, Investor at Grok Ventures
Think about how can you finish the meeting and leave the investor super excited to want to know more and spend time with you.
Investors are motivated by founders who have grit and are willing to work around change. Building a startup is hard.
Yes, it is important that the problem space you are working in is big enough to get to venture scale, however, they want to see individuals with unique approaches capturing insights that others cannot. Be aware of how important it is to convey your bigger mission, vision and how your solution really solves a problem, at scale.
Ultimately, as much as investors need to conduct due diligence on potential founders, it is as important for founders to educate themselves about the current VC climate in Australia.
VC funds have certain missions they invest according to. However, the fundamental points they look out for include determining if you are a founder with conviction in the problem you are solving. Can you articulate the problem in a manner that inherently translates the market size and frequency of the problem you are dealing with? Are you passionate and seem to possess the ability to grow your business and lead large teams of people, ultimately creating a business of venture scale?
********
Enjoying reading this newsletter? Subscribe and share it to help us grow together!
You can contact us directly here to share your feedback, ask questions or discuss collaborating on an article or podcast episode.
💡 Find out more about Curiosity Center.
🎙 Enjoy 110+ episodes w relatable role models from 40+ industries on The High Flyers Podcast.
 | A guest post by
|