The team at Sydney-based VC firm Folklore share some of their insights on the investment process to help founders, especially early founders, understand how to approach VC engagement from your first call through to what to expect from your VC after receiving your first check , or even rejection.
In part one of this series, Britt Boxall of Folklore shares how to approach your first interaction with a VC, building on the insights she gained from reviewing over a thousand pitch decks and meeting hundreds of founders.
When I’m not supporting existing founders within Folklore’s portfolio, I spend most of my time learning about new companies and meeting founders. Since joining Folklore 1.5 years ago, I’ve had the incredible opportunity to consider over 1000+ startups (~3 per day).
Startup founders often ask the investment team: “What can I expect from my first encounter with Folklore?” But I would turn that question on its head. As a founder, what do you hope to get out of the conversation?
Before approaching a VC, as a founder, you should try to figure out if the VC is right for you. Does your industry or stage align with the VC’s mandate? Provides the company with what you need to grow your business, such as a strong one Support stacka network of experts and learning and development opportunities and pathways to follow-on capital from the VC and other VCs?
It is important to keep in mind that every company is different in terms of mandates and processes. However, there are many universal ways that founders can increase their chances of getting noticed and subsequently getting investment.
I hope this helps demystify the process and allows you to approach investor relationship building with more confidence and clarity, maximizing ROI for both your startup and the investors you meet.
Build your pitch deck
A pitch deck is a great way to provide an overview of your business and give investors an initial understanding of what problem you’re solving and why you’re raising money.
If you google examples of pitch decks, you will probably see tons of examples. It is important to keep in mind that your deck should be unique to your startup and its stage of growth.
A pre-seed startup may not have traction yet or its business model may not be fully mapped out yet, and that’s okay! If so, my suggestion is to find out what metrics you think are important for your business and have goals in place to make sure you’re on the right track.
When Folklore invests in pre-product startups, it’s because the founder has been able to clearly articulate their startup’s purpose and product vision, and the team has a deep understanding of the problem, the market, and its customers.
When putting together a pitch deck, it’s important to concisely and clearly communicate the key points for each section. I know it can be tempting to include as much context as possible to paint the picture, but this makes it less digestible for the reader, and any additional context can be provided at the meeting.
There is no hard and fast rule about what should be included in a pitch deck, but here are some things you should consider including in your pitch deck.
The first touch point
VCs like to have a clear idea of what your objectives are before entering into a conversation. If you’re looking for capital, feedback, or just a general catch-up, be upfront about that when you reach out to investors to arrange initial meetings.
Catching up is a great way to get on the VC radar and build a relationship before you raise. It’s also a great opportunity to ask for feedback and discuss things.
If you want to pitch, make sure you’ve spent time researching the VC to make sure your startup fits within their core investment focus areas.
Every VC will differ when it comes to intros, but below are some ways you can land a first meet:
- Going through the VCs portfolio and seeing if you have any connections you could use for a warm introduction
- An introduction to another VC (it’s fine to ask an investor who has said ‘no’ to you if they know someone who would be a good fit)
- Contact a VC directly on LinkedIn or Twitter
- Or submit a pitch through their website
If you’re contacting an investor directly, I recommend taking a high-level snapshot of your business and adding your pitch deck. This both saves you time as it ensures that your startup might be a good fit for the fund before scheduling a call.
Once you’ve arranged a call or meeting, keep in mind that you’ll probably only have 30 minutes with the investor. Some VCs may prefer a formal pitching session, but at Folklore we tend to have our initial conversations quite casually and are flexible in how the founder wants to have the conversation and share his vision.
You can assume we’ve read the deck ahead of time, so the conversation will likely consist of pointed questions.
As for what to prepare to come to a meeting, our conversations and questions always differ from startup to startup. My goal during these initial conversations is to learn more about you and your vision, and to see if there are ways we can support you throughout your investment journey.
I want to see how well you know your problem, your market and your customers.
It’s also best to ask a VC’s level of knowledge of an area rather than assume it, especially if you’re building a complex, technical startup. Think about and practice how you would approach explaining your business at a high level to someone with no knowledge of the area.
I think being able to synthesize and clearly articulate complex concepts is a very underrated skill – I’m always amazed at founders who have mastered this skill.
I also want to emphasize that an initial phone call is an opportunity for you as a founder to ask VCs questions. After all, you’re potentially going on a 10-year journey with a VC, so you want to make sure you’re on the same page in terms of how they see your business.
What happens now?
After an initial screening interview, we will attempt to contact you as soon as reasonably possible after we have had a chance to process the shared materials. During this time, we may also request additional materials or access to a data room.
In general, the Folklore team aims to send you a steering wheel one to two weeks after our first meeting to either schedule another meeting or, if we think your business doesn’t fit our investment strategy, we’ll quickly give you some feedback.
At the end of the day, what matters is the content of a founder’s vision and what they are building – not the font you use in your pitch deck or the T-shirt you wear to our first meeting; focus more on how clearly you can communicate your vision to the right potential VC partner.
And don’t be put off if you get a ‘no’ from an investor. This does not necessarily mean the end of the line with that investor or others. But more on that soon…
In the meantime, if you’re a budding founder pushing the boundaries of what’s possible through software-based businesses, I’d encourage you to put these principles into practice!