Providing written answers helps potential investors defend you with other partners in the company.
3 minutes read
The views expressed Pioneer Shareholders are their own.
I have noticed that many of the founders who raise capital prefer to face-to-face meetings, as opposed to answering questions in writing. When you raise money, I suggest that you do both, keeping in mind that you are achieving different goals.
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The purpose of a written communication with an investor is usually threefold: persuade the investor to meet you, and become your advocate. Once you have done that, help the defenders to win over their broader organization.
In the majority of venture capital firms (including our companies), you not only have to convince a partner. You have to convince one partner, in addition to the other team members either agreeing to the investment or at least not strongly opposed. If you are talking to VC, you should know how decision-making takes place. Different VCs have different processes for internal decision-making. For example, Jeff Clavier, the founder of Uncork Capital, notes: "Obviously, there is respect among us as a team, and if one of us really wants to conclude a deal with a track record, others will be delayed and supported – unless a card is pulled over my body. The case of Nemer ". Providing written answers makes it easier for your main partner to share your point of view and convince colleagues to support investment.
I have previously written a checklist of information to share with VC. I agree with Mark Suster, managing partner of Upfront Ventures, who recommends sending a complete package, not just a link.
The purpose of a face-to-face meeting (or a phone call, although usually less effective) is to approach the closing of a business relationship. It is very difficult to get an investor to commit without this direct dialogue, ideally with as many of her colleagues as possible. A retail investor may join an existing syndicate on a group financing site based on the deck and possibly an email. However, the company's biggest challenge is usually to find a major investor, which requires a meeting.
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If your answers are not written so your partner can easily share them, here's what happens:
- The main partner asks Ijtihad questions;
- You answer them in a meeting or call;
- The main partner may record notes, which will inevitably be a condensed summary of your response;
- The partners hold a meeting to discuss the matter, and during this time the main partner tries to win other people next to you. However, the main partner usually does a worse job than your share.
There is only one way to simulate your presence in the room with other partners: to prepare thoughtful, concise and judicious responses in a neutral way to investors' concerns. I was in investor meetings where I or a colleague would pull out the deck or some notes and say, "In fact, here's what the company says about it …"
I suggest creating a "FAQ" document, summarizing the most common questions from potential investors. It shows a lot of self-confidence if you can share the whole document, giving new investors the confidence that they have identified all the different issues they should investigate.
Your goal is to make your lawyer's job as easy as possible.