After eight weeks of being heads down working with our portfolio companies, I’ve started to come up for air and do some public facing stuff. I was recently on a cool panel at Denver Startup Week where we talked about scaling towards profitability. Another highlight was doing an AMA with David Brown, co-CEO of Techstars, at an awesome event called Patriot Bootcamp. Last week I did my first interview as a VC for a monthly magazine. The interview was a great experience because it was the first time in more than three years where I didn’t have a person from corporate communications in the room to make sure I said the right things. This interview was just me and my Foundry partner, Brad Feld, answering the reporter’s questions based upon what we actually thought. What a crazy concept!
In all of the above exchanges, I was asked some version of “what’s the number one thing that you see entrepreneurs get wrong when pitching venture firms?” The answer is obvious. You would only need to live in my email inbox for one day to see the mistake for yourself. The most common mistake is that entrepreneurs often violate what I call The First Rule of Engagement. This rule is based around the notion that the results you will get out of any given communication are directly proportional to the amount of energy you put into it. To be clear, this doesn’t mean that the longer the email you write, the better the results you will get. On the flip side, the first rule usually means that a highly personalized email will get better engagement than a generic email that has been blasted to the masses.
I became keenly aware of this basic engagement concept more than 15 years ago while working at Aquent. In my 11 years there, I learned as much about business as I learned in the 16 combined years working at EDS, Oracle, IBM, Gnip, and Twitter. Much of what I learned came from working side-by-side with Aquent’s CEO, John Chuang. The first time I remember hearing John talk about his engagement philosophy was during a business unit update meeting. The leader of the business unit was expressing disappointment around the limited feedback we were getting from customers on an important new product. The email we had sent to customers was getting a low response rate, and the open ended questions we had asked in the email were capturing very few insights. John responded with a rant that included stuff like “Why are we sending an email!? Why don’t we pick up the phone and actually talk to customers!? Better yet, why don’t we get on a plane and go visit them!?” John explained that the low effort needed to create a generic email didn’t match the high value of the data we needed to collect. John was basically pointing out that when it comes to engaging people, you get out of it what you put into it!
Electronic communication has fundamentally changed how businesses operate over the last 25 years. From email to Slack to text messaging, it has never been easier to quickly reach people and exchange ideas. But, email in particular can be a very lazy tool. You can write a single email in a few minutes and send that message out to thousands of people and fool yourself into thinking you’ve accomplished something. Unfortunately, recipients can almost always identify when an email is generic versus personalized for them. The key to effective engagement is making sure you understand the importance of the response you desire and then using the right amount of effort to get the response you want.
So, how can entrepreneurs use the First Rule of Engagement to improve their VC pitches? The first step is to personalize each email introduction based upon your knowledge of the recipient. Yes, this means you actually need to research and understand each individual VC you are pitching. The good news is that most VCs love to talk about themselves. We write blogs like this one and use lots of social media where we share our thoughts and interests. The nature of our job practically requires that we be public facing. There is also plenty of public data around which VC firms have invested in which businesses. Finally, most VC’s write about their investment philosophies on their websites. As a point of reference, here’s our thematic approach to investing. You can and should use all these individual insights to determine if a particular VC is likely to be interested in your business before you send the email. If you determine there is a match between your business and a particular VC, focus your pitch on why there is a match. The recipient may not ultimately like your business idea, but there should be no doubt in the recipient’s mind why you decided to reach out to them specifically in the first place.
Sending a personalized email can make a real difference, but your efforts around engagement shouldn’t stop there. In my case, I’ll freely admit that I’m more likely to engage with an entrepreneur if I’m introduced to a new company/founder from someone I know and trust. Again, there are plenty of tools out there that can help you get connected to me via someone I know. LinkedIn is an obvious tool to use, but there are plenty of other creative ways if you are willing to look. For example, review our portfolio of companies. Do you know anyone who works at one of our portfolio companies who could introduce you? Also, look at who I engage with on Twitter and other platforms. Do you know any of these folks who could introduce you? If you are willing to put in a little effort and think creatively, you might find an introduction to a VC which will help get their attention.
Unfortunately, the vast majority of inbound emails I get from people looking for an investment can be boiled down to this: ”Hey, we’re working on something amazing. Take a look at this attachment and let me know if you are interested in investing.” When I get these emails, I think to myself “you spent zero effort thinking about why I would be interested in investing and that is exactly how much time I’m going to spend considering it.” I respond to these inquires with a generic message that indicates I’m not interested. I’m always amazed when the original sender responds back “okay, can you introduce me to others who you think would be interested?” Are you kidding me?! Not only did this person put zero effort into our relationship, but they are now asking me to do work on their behalf because they were too lazy to do it themselves. Running a company is damn hard. Signaling to an investor that you are too lazy to do basic research is a strong signal that an investment in your business is not a good decision regardless of the opportunity. As the old saying goes, you only get one chance to make a first impression.
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Also published on Medium