Andy McLoughlin is a venture capitalist at Uncork Capital. Andy recently shared some time with Burkland’s Head of Marketing, Kate Adams, to answer a few questions we frequently hear from startups. In the second portion of our interview, Andy shares tips to help startups approach and communicate with venture capitalists.
Q: How should a startup begin communication with a VC?
A warm intro by your network, existing investor, angel, or mentor is always ideal. But not everyone has that resource or access to someone who can provide it.
It is fine to write a cold email – we have made some great investments from cold email inquiries. If you do though – you must do your homework.
Look at a VC’s existing portfolio to get insight on the markets they invest in, the stage they invest, and where they invest in terms of geography. If it is aligned with your startup, then that is probably a good firm to target.
One cardinal sin is to send a blanket pitch out to the entire VC community. I recently received an email from one founder who had sent his pitch to about a hundred investors. Even worse – they kept everyone in the “to” email field, not even in “bcc”. I was waiting for someone to crack and reply all to complain, but thankfully nobody did!
Q: What’s the best advice for a startup making a cold pitch to a VC?
The best advice to remember with a cold pitch is to “show me you know me”. Show the investor you have done the work, and this is why you are pitching to them. I learned this from my own startup. Raising venture is like enterprise selling – you are asking for huge checks. I learned we were most successful in enterprise selling when we took the time to figure out what made the buyer tick. This is similar to getting an investment – find out what makes them tick. Don’t target a hundred investors but instead research a small number: ten to twenty. Do your research – find those that invest in your market, stage, and geography.
An example of a cold pitch that showed us they did the work was from Coder, a startup based in Austin, Texas.
- Coder sent us a well-crafted email, noting that they were using a product of one of our current portfolio companies.
- In the intro email, they also explained why they could be a good fit for an investment from us based on their market, geography, and stage – clearly showing they had done their homework.
- They included both a pitch deck and a video highlighting their product.
It was very well done, very compelling, and clear we were a good fit. I was on the phone with them that afternoon. Our other two partners, Stephanie and Jeff, spoke with them that week. We had a term sheet for them in a couple of weeks and they are now one of our portfolio companies.
Q: Last words of advice to founders on their pitch interactions with VCs?
One thing we see a lot of is when we pass on an investment. Founders ask us to make an introduction or referral to another VC or investor. If it is a stage or a geography mismatch, that makes sense. But if it isn’t, it’s best not to ask for that. If we passed on the investment because we can’t get comfortable with the team or the potential of the startup, don’t ask us for a referral. It’s not a good signal for us to pass you on to another investor because they will ask us why we passed and we have to be honest.
Read the first portion of our interview, where Andy talks about what VCs look for when they invest in a startup.