Raise Millions: First Stage of Captivation – The Hook
What are you trying to achieve when you meet with VCs?
You may think it’s to close in on a, let’s say, a $3million dollar investment for example and you should always keep the goal in mind but there are stages when building the relationship. You need to recognized them and make sure you are delivering at each step of what I call “The Stages of Captivation”.
Why do I call it that? Because that is exactly what you are trying to do – you are trying to captivate a VC at each stage of your interaction – from the first communication all the way through to term sheets and a deal. Why?
Because you are trying to establish and build a relationship with a VC – you are trying to attract them and encourage them to want to build something great with you – it is not about the cash, it is not short term and is not a loan – it’s a relationship so you can create something worthy of both their and your efforts.
So what is the First Stage of Captivation – The Hook
Before you even get through the door…you need to hook them.
How do you do that?
By making yourself look attractive.
Most often that first touch with a VC will be from your initial introductory email or executive summary.
Now be careful – with these two tools you are NOT trying to get your entire life story into as small a space as possible – you are trying to do just what I said before “You want to Hook them”. In other words, you are trying to entice them – to wet their appetites just enough that they want to meet you.
So, focus on the business opportunity and in particular, the size of the opportunity i.e. the upside if you manage to create a company which delivers on your expectations but a note of caution – try not to use to much hyperbole – keep the fact that you are about to change the world to yourself for the moment, instead cover the industry you are focused on, the business you want to build, why you are the right team to build it – If you cover those elements I would consider stopping there – with one added element –
If you are reaching out to a few VCs (and you should) – you should consider mentioning this point within your initial pitch – Why?
Because it’s human nature –
If you are attractive and popular with others then you’ll be more attractive and popular with these VCs.
And aside from the psychology of it – VCs want to find out about attractive opportunities before their VC competition – so consider briefly mentioning “We are meeting with a select group of VCs in Sand Hill Road” for example, suggests there may be interest from other VCs too – You have begun to create an ‘Impetus for Investment Action’.
…and because of it they will be more compelled to consider your opportunity and act themselves.
So – and let me make this point very clearly – one element of the hook is to suggest interest from their competition – Why? So you can create momentum.
What do I mean?
You want them to want you. And what will create that impulse?
A great initial hook, competition and a closing window of opportunity.
Throughout the process – at the start and all the way through – subtly mention that others are also interested in your opportunity. Capitalize on human nature – being confident and showing a certain demand is critical. A note of caution – there are not many bullets in this gun – do not try to suggest competition over and over again – use those few bullets selectively and wisely.
So – that covers the First Stage of Captivation – The Hook.
I’ll cover the second stage on the next podcast.
Until then – remember establishing a relationship with a VC is a two way relationship – Always keep in the back of your mind “what can they bring to the party aside from cash? Do you like these guys? Do you trust these Guys?”
So – Thank you for listening.
Please go along to AndrewIve.com to sign up for my mailing list and get update when other Podcasts and postings are available.
Was this helpful? Post a comment and let me know…